[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Proposed Rules]
[Pages 47047-47063]
[FR Doc No: 2014-18925]

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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: Notice of proposed rulemaking (NPRM).

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SUMMARY: PHMSA is proposing to address certain matters identified in
the Hazardous Materials Transportation Safety Act of 2012 related to
the Office of Hazardous Materials Safety's Approvals and Permits
Division. Specifically, we propose to revise the regulations to include
the standard operating procedures and criteria used to evaluate
applications for special permits and approvals. These proposed
amendments do not change previously established special permit and
approval policies. This rulemaking also proposes to provide clarity
regarding what conditions need to be satisfied to promote completeness
of the applications submitted. An application that contains the
required information reduces processing delays that result from
rejection, and further facilitates the transportation of hazardous
materials in commerce while maintaining an appropriate level of safety.

DATES: Comments must be received by October 14, 2014. To the extent
possible, PHMSA will consider late-filed comments as a final rule is
developed.

ADDRESSES: You may submit comments by identification of the docket
number (PHMSA-2012-0260 (HM-233E)) by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting
comments.
     Fax: 1-202-493-2251.
     Mail: Docket Operations, U.S. Department of
Transportation, West Building, Ground Floor, Room W12-140, Routing
Symbol M-30, 1200 New Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: To Docket Operations, Room W12-140 on the
ground floor of the West Building, 1200 New Jersey Avenue, SE.,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.
    Instructions: All submissions must include the agency name and
docket number for this notice at the beginning of the comment. All
comments received will be posted without change to the Federal Docket
Management System (FDMS), including any personal information.
    Docket: For access to the dockets to read background documents or
comments received, go to http://www.regulations.gov or DOT's Docket
Operations Office (see ADDRESSES).

FOR FURTHER INFORMATION CONTACT: Donald Burger, Office of Hazardous
Materials Safety, Approvals and Permits Division,<PHONE_NUMBER> or
Eileen Edmonson, Office of Hazardous Materials Safety, Standards and
Rulemaking Division,<PHONE_NUMBER>, Pipeline and Hazardous Materials
Safety Administration (PHMSA), 1200 New Jersey Avenue SE., Washington,
DC 20590.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
II. Background
    A. MAP-21
    B. Standard Operating Procedures
    C. Fitness
    D. Public Meetings
    i. PHMSA's Basis for Fitness Review
    ii. Data Accuracy
    iii. Streamline the Special Permit Review Process
    iv. Adjudication, Resolutions, and Denials
    v. Develop the Fitness Program Through the Rulemaking Process
    vi. Modal or Hazardous Material Regulatory Agencies and Other
Country Competent Authorities
    E. Notice No. 12-5
III. Special Permit and Approval Standard Operating Procedures
    A. Completeness Phase
    B. Federal Register Publication
    i. Special Permit
    ii. Emergency Special Permit
    iii. Approval
    C. Evaluation Phase
    i. Special Permit
    ii. Emergency Special Permit
    iii. Approval
    D. Disposition Phase
    i. Special Permit
    ii. Approval
IV. Special Permit and Approval Application Evaluation Criteria
V. Miscellaneous Proposals
    i. Clarifying the Definitions for Special Permits and Approvals
    ii. Clarifying That An Approval Application is Subject to the
HMR When Submitted to Other Agencies
VI. Summary Review of Proposed Amendments
VII. 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
VIII. List of Subjects

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 Sec.  33012 of HMTSIA, Congress directed the U.S.
Department of Transportation (Department or DOT) to issue a rulemaking
to provide:
     Standard operating procedures (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.
    In this NPRM, we are proposing to provide the public with notice
and an opportunity to comment on the procedures PHMSA currently uses to
support the administration of its special permits and approvals
programs with the intent of eventually adding these procedures to 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 Sec.  33012 of MAP-21.

    The benefits of this NPRM include: increasing the public's
understanding of the special permit and approval application and
renewal process, improving the quality of information and completeness
of applications submitted, and improving application processing times.
This NPRM does not impose any additional costs on industry. This
proposed rule would affect only agency procedures; therefore, we assume
no change in current costs or benefits.

II. Background

A. MAP-21

    To assist PHMSA with managing its special permit and approval
programs, Federal hazardous materials (hazmat) transportation law (law)
requires PHMSA to ``. . . issue regulations that establish--(1)
standard operating procedures to support administration of the special
permit and approval programs; and (2) objective criteria to support the
evaluation of special permit and approval applications.'' See 49 U.S.C.
33012(a)(1) and (a)(2). PHMSA established a work group in July 2012 to
examine ways to streamline the fitness review process while maintaining
an acceptable level of safety, and to define and determine the adequacy
of criteria that should be used to initiate fitness reviews. As a
result of this workgroup's efforts, PHMSA is proposing in this NPRM to
add updated SOP and evaluation criteria we currently use to process
special permit and approval applications into the Hazardous Materials
Regulations (HMR; 49 CFR Parts 171-180).
    The HMR prescribe regulations for the transportation of hazardous
materials in commerce. PHMSA issues variances 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 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 [for Hazardous Materials Safety, herein
described as `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'' the
regulations ``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 consent from the Associate Administrator or other
designated Department official, to perform a function that requires
prior consent under'' the HMR. (See Sec.  171.8.) Applicants who apply
for a special permit must do so in conformance with the requirements
prescribed in Sec. Sec.  107.101 to 107.127. 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. In
the following section, we describe the history of PHMSA's SOPs for its
special permit and approval programs and the evaluation criteria we
currently use to process special permit and approval applications.

B. Standard Operating Procedures

    In the mid-2000's, PHMSA, in conjunction with the DOT's Office of
the Secretary, conducted an internal agency review of its special
permit and approval program practices. This review indicated that some
active special permit holders that were no longer in business had used
their special permit in locations not designated in the application,
changed company names and locations without informing the agency, or
otherwise used their special permit in ways not authorized in the
special permit. The Department determined that PHMSA's current
practices for assessing the fitness of its special permit and approval
holders needed improvement. During the mid and late 2000's, PHMSA
experienced an increase in special permit and approval applications
while it simultaneously revised its computer software for processing
these applications.
    In 2009, PHMSA revised its procedures for processing and evaluating
special permits and converted them into SOPs for its Special Permits
Program. In 2011, PHMSA revised its SOPs for its Approvals Program. As
a result of ongoing program evaluation, PHMSA has periodically updated
these SOPs to include recommendations, refine its processes, increase
uniformity, and respond to upgrades to its data management systems.
Further, we discontinued the practice of allowing party status (also
referred to as ``party-to'' status) to an applicable special permit to
large associations, instead requiring each holder to apply separately
for party status. Party status is granted to a person who intends to
offer for transportation or transport a hazardous material, or perform
an activity subject to the HMR, in the same manner as the original
applicant. We have also issued several rulemakings to incorporate into
the HMR special permits that are generally applicable and have a safe
performance history. Although PHMSA has incorporated more special
permits into the HMR in recent years, requiring individual persons to
apply for party status on existing special permits has increased the
number of special permit applications received and, thus, the time
needed to process them. PHMSA receives approximately 3,000 special
permit applications and approximately 20,000 approval applications
annually.
    To avoid additional processing delays for the special permit and
approvals programs, PHMSA has revised its SOPs to change how it manages
incomplete applications from the practice of ``retaining them while
requesting and waiting for missing information'' to ``rejecting
incomplete applications.'' Applicants who would like to have their
applications reconsidered must resubmit the entire application along
with the requested missing information. PHMSA informs applicants in
writing of the reason for the rejection and what information is missing
from their applications. In the past, some individuals in receipt of
rejected applications communicated to PHMSA that the materials they
received did not explain how or exactly what was to be resubmitted,
which led to more incomplete submissions and processing delays. PHMSA
seeks comments on ways to improve the effectiveness of its
communications and the completeness of applications it receives.
    If, according to the HMR, a special permit or approval application
is complete but PHMSA requires an on-site review or additional
information to make an appropriate determination, PHMSA may make this
request within 30 days of its receipt of an application for a special
permit, modification of a special permit, or party to a special permit,
and within 15 days of PHMSA's receipt of an application for renewal of
a special permit (see Sec.  107.133(a)). The applicant has 30 days from
the day it

receives this request in writing to provide the information. If the
applicant does not respond to a written request for additional
information within 30 days of the date the request was received, PHMSA
may deem the application incomplete and deny it. However, if the
applicant responds in writing within the 30-day period requesting an
additional 30 days within which it will gather the requested
information, the Associate Administrator may grant the 30-day
extension. Over the past year, PHMSA has received fewer complaints from
applicants about this phase of the special permit and approval review
processes.

C. Fitness

    In 1996, PHMSA amended the HMR so that it may [emphasis added]
issue a special permit and/or approval upon finding that ``the
applicant is fit to conduct the activity authorized'' by the special
permit and/or approval, and the special permit's or approval's renewal
or modifications. See Docket No. HM-207C, 61 FR 21084. We later revised
these provisions on January 5, 2011, in a final rule, entitled
``Hazardous Materials Transportation: Revisions of Special Permits
Procedures,'' issued under Docket HM-233B (76 FR 454). The final rule
clarified existing requirements in the special permits application
procedures. It also required additional, more detailed information in
each application so PHMSA could strengthen its oversight of the special
permits program. Specifically, the final rule established regulations
that:
     Authorized electronic service for all special permit and
approval actions;
     Replaced the obsolete word ``exemption'' with ``special
permit'' and removed language stating these terms were equivalent;
     Revised the requirements to submit an application for
party-to status and to renew, modify, reconsider, and appeal a special
permit;
     Revised the requirements to process, evaluate, modify,
suspend, or terminate a special permit; and
     Provided applicants with an online application option to
promote flexibility and reduce the paperwork burden on applicants.
    In addition, Sec.  107.113(f)(5) was revised in the Docket No. HM-
233B final rule to state that a fitness ``assessment may be based on
information in the application, prior compliance history of the
applicant, and other information available to the Associate
Administrator.'' As a result of these activities, stakeholders
expressed concerns regarding the fitness assessment process and
requested a rulemaking with a notice and comment period to address how
fitness is determined under the HMR.

D. Public Meetings

    On February 29, 2012, PHMSA hosted a public meeting at the
Department's Washington, DC, headquarters. The goals of the meeting
were to ascertain the concerns of special permit and approval
stakeholders, examine what conditions may be used to successfully
assess an applicant's ability to operate under a special permit or
approval, solicit comments on past changes, and hear ideas regarding
process improvement. Eighteen stakeholders spoke at the meeting. These
stakeholders expressed interest in becoming involved in PHMSA's process
to resolve special permit and approval processing concerns, but were
especially concerned with the special permit process. Representatives
from the following companies provided comments and/or asked questions:

 American Chemistry Council
 American Coatings Association
 Arrowhead Industrial Services
 Association of Hazmat Shippers
 Chlorine Institute
 Citizens for All Transit Chemical Contamination
 Council on Safe Transportation of Hazardous Articles, Inc.
(COSTHA)
 Dangerous Goods Advisory Council
 Gases and Welding Distributors Association
 Institute of Makers of Explosives
 Industrial Packaging Alliance of North America
 Labelmaster Services
 National Private Truck Council
 North American Transportation Consultants, Inc.
 Nuclear Information and Resource Service
 Praxair, Inc.
 Teledyne Consulting Group
 United Parcel Service

    You may review the meeting's transcript at ``http://regulations.gov'' under Docket No. PHMSA-2012-0260 (HM-233E). Key
issues raised during the public meeting are summarized below.
    i. PHMSA's Basis for Fitness Review--Under Sec.  107.113(f)(5), the
HMR authorize PHMSA to consider evidence of an applicant's fitness,
i.e., the applicant's demonstrated and documented knowledge and
capability to conduct the activity the special permit would authorize,
when deciding whether to issue or deny an application. Most attendees
at the meeting were concerned about what types of criteria would be
used to determine fitness and if these criteria would fairly assess an
applicant's ability to perform the tasks authorized in the special
permit. Some attendees requested PHMSA spend less time assessing an
applicant's fitness and more time evaluating the application for its
safe (technical) merit, the assumption being that using a safe design
would inherently be safe because of the user's knowledge of the tasks
required in a special permit, regardless of the user's safe performance
and/or incident history. PHMSA disagrees. The establishment of safe
practices and procedures is an essential part of each special permit
and approval. However, PHMSA and DOT's internal review and on-site
inspections of how special permits were applied revealed in many
instances that special permits were not being used in ways authorized
in the special permit. Further, PHMSA found reliance on the
requirements in the special permit alone was inadequate to determine an
applicant's ability to carry out these tasks, who was performing the
tasks, or where these tasks were being done. In addition, tasks and
procedures requested in special permit and approval applications vary
and must be considered on a case-by-case basis. As a result, PHMSA
needed additional information to determine the applicant's ability to
satisfactorily complete required tasks. PHMSA revised its previous
system for making these determinations to include a fitness requirement
in the HMR in response to the March 4, 1995 Presidential Memorandum
entitled ``Regulatory Reinvention Initiative,'' which directed the
federal government, in part, to partner with people and other federal
agencies ``to issue sensible regulations that impose the least burden
without sacrificing rational and necessary protections.'' PHMSA then
developed SOPs in guidance documents, as mentioned earlier in this
preamble, to further explain how PHMSA managed the fitness review
process. In this NPRM, PHMSA proposes to revise its SOPs to clarify
what phases in the review process are used based on the type of
application submitted.
    Several attendees suggested that fitness assessments should be
based only on a risk evaluation of number and type of incidents,
reports, approvals, independent inspection agencies, and the high
degree of risk of the activities requested in each special permit
application. Many supported limiting the assessment criteria to those
incidents involving death and serious injury, stating that this
position is consistent with the original intent of PHMSA's fitness
assessment

requirements. One attendee suggested different criteria should be
established for large and small operators due to the differences in
their exposure to events that can cause an incident, and stated the
``one-size fits all'' approach PHMSA is proposing is inappropriate and
unfair. A few attendees recommended that fitness reviews be based on
the ability of the applicant to perform the functions requested in the
special permit or approval application. Another attendee recommended an
applicant's fitness be evaluated for new or alternative operations only
because the successful performance of these tasks is ``heavily
dependent'' on the applicant's ability to perform them. Cynthia Hilton,
Institute of Makers of Explosives, recommended that PHMSA use the
following procedural and fitness criteria to make this assessment: (1)
``a standardized look-back period of four years. . .the typical
duration of a special permit, (2) fitness reviews not . . . triggered
by the filing of an application but periodically performed'' and
designed to ``expire after four years unless revoked or suspended due
to subsequent findings of imminent hazard or a pattern of knowing or
willful non-compliance,'' (3) when processing applications to make
determinations of fitness ``start with a presumption of applicant
fitness rather than . . . a position that an applicant must establish
fitness,'' (4) combine evaluation tasks, (5) undertake ``site visits by
Field Operations only . . . where fitness cannot be demonstrated by
some other means,'' (6) do not select an applicant ``for additional
scrutiny solely because they're moving a Table 1 [Sec.  172.504(e)]
material,'' and (7) do not include ``errors on shipping papers, minor
leaks in packaging, inadequacies in test reports'' when determining ``a
finding of unfitness'' but do include ``a flagrant pattern of serious
violations affecting safety. . . .''
    PHMSA agrees with many of the recommendations of these attendees.
In this NPRM, PHMSA has revised its SOPs to base its fitness evaluation
and safety profile reviews on the ability of each applicant to perform
the tasks authorized in a special permit or approval. Further, PHMSA's
approach for detecting applicant incidents and/or violations is
designed to detect flagrant patterns and serious violations in the four
years prior to submitting an application. In addition, applicants must
have two or more incidents to trigger a review; they are not subject to
review just because they are moving a Sec.  172.504(e) Table 1
material. To the extent possible, PHMSA has combined evaluation tasks.
For example, the automatic and technical reviews are performed
concurrently. However, PHMSA also disagrees with some of the attendees'
suggestions. For example, PHMSA disagrees with the attendee's
suggestion that an applicant's fitness be evaluated for new or
alternative operations only. Historically, PHMSA has found an
applicant's pattern of minor violations could reveal larger problems,
such as with training. PHMSA initially processes each application
automatically by computer. As a result, this process does not presume
innocence or guilt and cannot be limited to a six-month time period
before another automatic review is done. However, after the automatic
review is complete, for new applications PHMSA may consider only
fitness data since the last fitness review. For new companies with no
performance history, PHMSA will assess their training records. In
addition, companies that handle special permit and approval packagings
without opening them typically may reship these packaging when in
conformance with the terms of the special permit or approval. PHMSA
requests public comment on how to assess hazmat manufacturers that do
not ship.
    PHMSA finds the suggestion to ignore minor leaks in packaging may
not be inconsequential depending on the risks contained in the
material, and, therefore, may not eliminate this as a consideration in
a fitness evaluation. Regarding the elimination of on-site visits or
performing such visits as a last resort, PHMSA disagrees because an on-
site review is part of the process to determine if a fitness
determination is accurate. PHMSA has found some information can only be
determined by visiting the applicant at its facility because the agency
or appropriate Department official is in the best position to determine
what packagings and/or operations requested in the application are safe
under the HMR and what appropriate operational controls or limitations
may be needed. On-site visits are also used to clear up
misunderstandings or inaccuracies. A special permit provides an
equivalent level of safety or consistency with the public interest in a
manner that will adequately protect against the risks to life and
property inherent in transporting hazardous materials. A negative
fitness determination may suggest that an applicant has not
demonstrated or documented its knowledge and capabilities to assure
that it has an appropriate level of safety and performance. Although
the automated review PHMSA is proposing does not include variations
weighted for company size, based on our history with making fitness
determinations, PHMSA believes the SOPs proposed in this NPRM will be
effective in determining the safety of the tasks requested in the
application and the applicant's ability to perform these tasks safely
under the HMR.
    One attendee recommended PHMSA perform fitness determinations of
each special permit holder every one or two years, or on the basis of
another determining factor, so that holders will know when a review is
coming and, presumably, can plan for it accordingly. PHMSA disagrees as
it conducts reviews for new or renewal applicants at the time of
application. Further, PHMSA does not have sufficient resources or funds
to perform this task.
    One attendee suggested fitness evaluations include determining if
employees are hazmat trained in conformance with 49 CFR Part 172,
Subpart F, are able to demonstrate that they can follow the
requirements authorized under the special permit and HMR, and perform
their assigned tasks. This attendee also recommended the fitness
evaluation include determining if the applicant has a quality assurance
program. Another attendee suggested PHMSA use the fitness review
process to ensure the applicant is properly registered under PHMSA's
Hazardous Materials Registration program prescribed in 49 CFR Part 107,
Subpart G. PHMSA agrees. Each applicant's registration, if required,
will be assessed during the safety profile review, and hazmat training
will be assessed during the on-site inspection, if one is conducted.
    One attendee suggested applicants requesting party-to status for an
existing special permit be excepted from a fitness evaluation because
they will be manufacturing the same package that is successfully
manufactured by others already party to that special permit. PHMSA
disagrees. A fitness review is different from a safety equivalency
evaluation. When an applicant applies for party status to an existing
special permit, the technical review is not repeated since PHMSA has
already determined what provisions in the special permit will provide
an adequate level of safety. However, PHMSA has found historically that
applicants vary in their ability to perform the tasks required in a
special permit and must be individually assessed to ensure the safe
execution of the special permit.
    One attendee asked if an applicant has more than one location, will
PHMSA perform a fitness assessment on each individual location or will
a single

location be used to determine the assessment for the entire company.
PHMSA 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. If deficiencies are noted, it is the company's
responsibility to correct these deficiencies throughout its
organization.
    ii. Data Accuracy--PHMSA uses its own incident history and
compliance information as well as that from other sources, e.g.,
federal and state agencies, to assist in determining which applicant is
subject to a fitness assessment. Some attendees stated that this
information is either inaccurate or reflects incidents that do not
correspond with special permit performance, such as technical errors on
shipping papers, minor leaks, or inadequacies in test reports. Some
attendees questioned the accuracy of information in other agencies'
databases, and how these inaccuracies may affect PHMSA's use of this
information when determining if an applicant will be subject to a
fitness assessment. Stakeholders also questioned if using data not
intended for PHMSA's purposes could lead to inaccurate determinations.
Other attendees were concerned about the age of the incidents in the
database and whether companies with recorded incidents had corrected
problems. One attendee suggested PHMSA use the Federal Motor Carrier
Safety Administration's (FMCSA) Compliance, Safety, and Accountability
(CSA) program data as a more accurate example of information that
represents a 6-month time frame. If PHMSA did use older information,
one attendee suggested it use a fixed time period. Robyn Heald,
Chlorine Institute, stated ``an applicant's capability can best be
judged by its past and current performance and compliance with the
current regulations. PHMSA should continue to review an applicant's
level of fitness in cases of new or alternative operations prior to
considering approval. Based on the background PHMSA provided,. . . it
appears that when all is said and done the majority of applicants are
determined to be fit.''
    PHMSA enters the applicant's information into the Hazmat
Intelligence Portal (HIP), a web-based application that provides an
integrated information source to identify hazardous materials safety
trends through the analysis of incident and accident information. HIP
incorporates data from the Hazardous Materials Information System
(HMIS), which maintains and provides access to comprehensive
information on hazardous materials incidents, special permits and
approvals, enforcement actions, and other elements that support PHMSA's
regulatory program. HIP also incorporates data from FMCSA's Safety
Fitness Electronic Records (SAFER) System to evaluate an applicant's
fitness, which provides company safety data and related services to the
industry and public. This information is readily available through
PHMSA's database search and FMCSA's portal system and SAFER. These
databases only provide triggers for a safety review. Determinations are
made only after a safety profile review or on-site inspection is
complete. At this time, PHMSA has determined that less than one percent
of special permit applications are found unfit.
    Many sources for this information are self-reporting and vary on
the type and quantity of information collected. As a result, the data
collected may contain errors or inconsistencies, such as reporting
multiple spills from one packaging in one incident as separate
incidents, reporting the same type of event differently, or providing
gathered data that may be too dissimilar to provide an adequate
comparison. We know some information from other databases used in HIP
does not meet all the conditions in PHMSA's special permit and approval
programs but has merit as a tool to show areas where potential problems
may exist. PHMSA normalizes this data during the safety profile review
by contacting the applicant to obtain the number of hazardous materials
shipments and the applicant's hazardous materials incident ratio. PHMSA
or the Operating Administration (OA) also evaluate incident reports
during the safety profile review to determine if any incidents are
attributable to the applicant or a package, or if the incident reports
contain errors. In this NPRM, PHMSA is reducing the number of incident
categories that trigger a review from five to three, focusing on death
and injury and high-consequence incidents only. PHMSA is removing low-
level incident data from its fitness determination process. In
addition, triggers have been raised by 50 percent in two of the
categories. PHMSA notes that errors in other agency databases must be
corrected by contacting the agency or authority in charge of that
database directly. PHMSA has no authority to change their information.
However, we are always trying to improve the quality of our data and
invite public comment on how to improve this information. Specifically,
PHMSA requests public information on how long it takes applicants to
get incorrect incident information recorded in databases corrected.
    iii. Streamline the Special Permit Review Process--As a part of the
HMTSIA directive to issue SOPs that support how the special permit and
approval programs are administered, PHMSA is looking at ways to improve
how applicants' submissions are processed. The majority of attendees
supported PHMSA's efforts to streamline its fitness assessment
procedures, but differed in how they believed results should be
achieved. One attendee indicated that the length of time PHMSA takes to
process and issue a special permit or approval adversely impacts the
competition of U.S. industry, and recommended that all evaluation
criteria be risk-based. Another attendee suggested PHMSA would make the
special permit and approval application process more effective and
efficient if it differentiated between how it processes applications
concerning packaging design and those concerning operations. This
attendee recommended applications concerning packaging design should
concern only the merits of the design itself, because a safer, better
performing design stands on its own merit and should not be affected by
an applicant's performance history. One attendee suggested the review
process would be more efficient if PHMSA checked to determine if an
applicant is hazmat registered, if applicable, under PHMSA's program
specified in Subpart G of 49 CFR Part 107 (Registration of Persons Who
Offer or Transport Hazardous Materials).
    PHMSA is continually improving its database capabilities, and in
this NPRM is restructuring its fitness program to increase efficiency.
To capture faulty behaviors that may prevent the safe transportation of
hazardous materials in commerce, PHMSA applies the same fitness
criteria to hazmat packaging designs and operations. However, this
process cannot consider all impacts. PHMSA relies on the expertise of
the modal agencies to clarify the risks associated with each material
and procedure the applicant requests for use in a specific
transportation mode. PHMSA also shares its databases with the modal and
other hazmat-related agencies to run in their own programs for their
use to alert them to potential problem areas. PHMSA proposes in this
NPRM to use information generated four years prior to submission of the
application and to limit its information to exclude lessor incidents.
PHMSA believes limiting the fitness review to a fixed time period and
excluding lessor

incidents will improve the timeliness of its review process. FMCSA uses
information generated in the last 24 months of motor carrier data.
PHMSA also seeks public comment for ways to improve the processing of
its special permit and approval application processes, and to improve
the clarity of its communications with the applicants to ensure they
know how, where, and what type of information to submit to improve
PHMSA or the OA's processing of their applications.
    iv. Adjudication, Resolutions, and Denials--PHMSA is proposing in
this NPRM to clarify its process for issuing adjudications,
resolutions, and denials to include determinations of an applicant's
fitness. Several attendees were concerned with how PHMSA will
adjudicate, resolve, or deny its determinations of special permit
applicants as unfit. One attendee suggested that PHMSA not deny an
application for a single criterion unless there is an imminent hazard.
This same attendee also requested that PHMSA create a process where an
applicant can show cause why the agency should not revoke, suspend, or
deny the application. Another suggestion was for PHMSA to give
applicants a corrective action plan and an opportunity to perform in
compliance with the HMR for six months, similar to a type of probation.
    By proposing to limit its special permit and approval review
processes to eliminate lower level risks, all applicants are presumed
fit unless a minimum level of fitness criteria indicates the
application has triggered additional review. Further, all denials are
based on on-site inspections or modal criteria. PHMSA's reconsideration
process allows applicants to provide corrective actions to document
compliance following a denial. Problems with recordkeeping to keep
applications accurate and intact require that PHMSA requests each
applicant to submit the entire application again, including any missing
or requested information, for a denied or rejected application to be
reconsidered. PHMSA requests public comment on how this process may be
improved, and if letters requesting additional information clearly
describe what information is needed to make the application complete
and the process for resubmission.
    v. Develop the Fitness Program Through the Rulemaking Process--As
mentioned earlier in this preamble, the HMR have required PHMSA to
review an applicant's fitness to perform the tasks requested in a
special permit or approval application since 1996. In this NPRM, PHMSA
proposes to promote clarity by explaining in the SOPs the factors the
agency uses to conduct a fitness review.
    Most attendees requested that PHMSA issue a notice and comment
rulemaking on its proposal to incorporate SOPs and fitness criteria
into the HMR for processing special permits. This rulemaking satisfies
that request. Another attendee expressed the belief that incorporating
the SOPs and fitness criteria through a rulemaking would promote
greater accountability and transparency, as well as encourage HMR
compliance. PHMSA agrees, and for several years has undertaken many
rulemaking projects to incorporate special permits and approvals with a
safe performance history and tasks with general applicability into the
HMR. Once special permits and approvals are incorporated into the HMR,
their fitness will be evaluated with all other HMR regulations based on
the percentage of incidents. In addition, PHSMA believes that by
clarifying how it proposes to process these applications through this
NPRM, applicants will be able to substantially reduce the processing
times for their applications.
    Additional attendees indicated that incorporating an elaborate
review system into the HMR for assessing special permit applications
would be extremely difficult to apply to the wide range of applicants.
PHMSA agrees that a cumbersome review system is not beneficial, and
therefore is proposing to incorporate a more straightforward, user-
friendly review system in this NPRM. Attendees also requested that
PHMSA limit withholding special permits except in those cases involving
egregious violations or willful negligence. PHMSA disagrees. As stated
earlier in this preamble, historically PHMSA has found an applicant's
pattern of minor violations may reveal larger problems that could
adversely affect transportation safety.
    vi. Modal or Hazardous Material Regulatory Agencies and Other
Country Competent Authorities--When appropriate and based on current
agreements between the OAs, PHMSA coordinates the special permit and
approval applications it receives with the applicable modal (e.g.,
Federal Aviation Administration (FAA), Federal Motor Carrier Safety
Administration (FMCSA), Federal Railroad Administration (FRA), or U.S.
Coast Guard (USCG)) or hazardous material regulatory agencies (e.g.,
International Atomic Energy Agency (IAEA), Nuclear Regulatory
Commission (NRC), Department of Health and Human Services Centers for
Disease Control and Prevention (CDC), etc.). By coordinating review of
special permit and approval applications with the appropriate subject-
matter expert or experts, PHMSA better ensures safe performance of the
tasks requested in the application and improves efficiency through the
sharing of information. 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.
This is discussed in greater detail later in this preamble. Approvals
issued by authorized federal agencies under the HMR are independent
actions by these agencies; however, PHMSA may be asked to review such
approvals. It should be noted that these agencies are not subject to
the actions PHMSA is required to perform under this proposed
rulemaking, but may choose to do so. In addition, PHMSA typically
acknowledges hazardous materials approvals issued by competent
authorities of other countries.
    Attendees offered varied positions on how PHMSA should coordinate
with other modal and international agencies. One attendee indicated
that coordination with other modal agencies would streamline the
fitness assessment process. Another attendee questioned the necessity
and costs incurred by other modal agencies to provide PHMSA with their
incident information. Two attendees requested that PHMSA accept and
recognize similar hazardous materials transportation relief granted by
other competent authorities, but did not suggest how PHMSA would make
this determination. One attendee requested that PHMSA not allow
Department modal agencies to use PHMSA's fitness procedures to impose
more stringent fitness requirements than already exist in their modal
regulations, and that PHMSA should not use the fitness assessment
process to impose its regulations on the modal agencies as to whom is a
fit carrier.

E. Notice No. 12-5

    On July 5, 2012, PHMSA issued a notice to clarify and provide
further guidance on its policy of conducting initial fitness reviews of
applicants for classification approvals under Docket No. PHMSA-2012-
0059; Notice No. 12-5 (77 FR 39798). In the notice, PHMSA established
that it will no longer carry out Initial Fitness Reviews (IFR) as part
of the process for classification approvals, including those for
fireworks,

explosives, organic peroxides, and self-reactive materials. PHMSA has
found that the use of available agency information in the HIP and FMCSA
SAFER databases is focused on transportation and does not adequately
indicate a company's capability to manufacture the approved product in
conformance with the application submitted to PHMSA. Therefore, PHMSA
will continue to review the fitness of applicants for classification
approvals through application evaluation, inspection, oversight, and
intelligence received from PHMSA and/or another OA (e.g., FRA, FAA,
FMCSA, and USCG).

III. Special Permit and Approval Standard Operating Procedures

    The hazardous materials community is a leader in developing new
materials, technologies, and innovative ways of moving materials.
Because not every transportation situation can be anticipated and built
into the regulations, special permits and approvals enable the
hazardous materials industry to quickly, effectively, and safely
integrate new products, technologies, and procedures into production
and transportation. Before they are authorized by this agency, the
applicant must prove that the relief requested is of a safety level
that is at least equivalent to that provided in the HMR, or
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. Further, unlike
approvals, special permits can occasionally have hundreds of party
status holders. As mentioned earlier in this preamble, party status is
granted to a person who intends to offer for transportation or
transport a hazardous material, or perform an activity subject to the
HMR, in the same manner as the original applicant. Historically, PHMSA
has found that the new methods introduced in special permits and
approvals promote increased transportation efficiency and productivity,
and help to ensure our nation's global competitiveness.
    Special permits and approvals also reduce the volume and complexity
of the HMR by addressing unique or infrequent transportation situations
that would be difficult to accommodate in regulations intended for use
by a wide range of shippers and carriers. The discussion below provides
an overview of the existing procedures involved in the processing of
special permit and approval applications, as well as their
implementation.
    PHMSA's Approvals and Permits Division manages special permit and
approval application processing, application completeness, and
coordination of their technical and modal agency reviews. This Division
also processes modifications to, suspensions of, and terminations of
special permits and approvals. By proposing to include its SOPs into
the HMR, it is the goal of the Approvals and Permits Division to
fulfill the requirements of MAP-21 and improve each applicant's
understanding of the special permits and approvals application process.
    The SOPs for the administration of the Approvals and Permits
Program are summarized below. These procedures support the timely and
accurate processing of approvals and special permits, including New and
Modification special permit applications (Sec.  107.105), Renewals
(Sec.  107.109), Party Status (Sec.  107.107), as well as New, Renewal,
or Modification approval applications (Sec. Sec.  107.705 and 107.709).
    PHMSA assesses all special permit and approval applications in four
phases, which it calls the ``Application Review Process.'' We describe
these phases--Completeness, Federal Register Publication, Evaluation,
and Disposition--in greater detail in sections A through D that follow.
PHMSA may reject an application if it is incomplete or insufficient
(i.e., it does not conform to the requirements of the applicable
subpart). Further, PHMSA will process reconsiderations and appeals in
the same manner that the HMR require for new applications. Specific
practices for each may be found in the Approvals and Permits guides
posted on the PHMSA Web page at ``http://www.phmsa.dot.gov/hazmat/regs/
sp-a''.
    A. Completeness Phase. During the completeness review, PHMSA
determines if the application contains all of the information required
in 49 CFR Part 107, and if this information is sufficient to determine
the safety level of the relief the applicant is requesting. For a
special permit, the purpose of the completeness phase is to determine
if the applicant submitted the information required by Sec. Sec.
107.105, 107.107, or 107.109, and as provided in Sec.  107.113(f).
PHMSA then must analyze this information to assess whether the action
and/or process the applicant requests is sufficient to provide a level
of safety equal to that of the HMR, or 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, in conformance with Sec.  107.105(d)(3). For an
emergency special permit, the purpose of the completeness phase is to
determine if the applicant submitted the information required by Sec.
107.117 to justify emergency status, as well as the full application
required by Sec.  107.105, as provided in Sec.  107.117(d). The purpose
of an approval's completeness phase is to determine if the applicant
submitted the information required by Sec. Sec.  107.402 or 107.705 and
as provided in Sec. Sec.  107.709.

B. Federal Register Publication

    i. Special Permit--When a special permit application is sufficient
and complete, a summary of the application will be published in the
Federal Register, as required by Sec.  107.113(j), for 30 days to allow
for public comment.
    ii. Emergency Special Permit--Within 90 days of an emergency
special permit being issued, the application will be published in the
Federal Register, as required by Sec.  107.117(g), for 30 days to allow
for public comment.
    iii. Approval--New approvals that are issued are not required to be
published in the Federal Register; however, PHMSA will publish them on
the PHMSA Web site.
    C. Evaluation Phase. 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. PHMSA also evaluates the applicant to determine its fitness
to operate under a special permit or approval.
    If PHMSA completes its initial evaluation and determines that the
tasks or procedures the applicant requests are mode specific, precedent
setting, or meet federal criteria for a ``significant economic
impact,'' PHMSA coordinates the application's evaluation with the
appropriate OA. PHMSA will also coordinate an application evaluation
with an OA if the OA specifically requests participation. All other
applications not meeting these criteria are evaluated within PHMSA.
Whenever possible, coordination of an application occurs within an
electronic system to maintain awareness of the document's location as
well as version control.
    As part of the evaluation phase, PHMSA and/or the OA conducts
technical analyses of the risks that may

be associated with transporting a hazardous material using the proposed
packaging or operation in the specific mode or modes of transportation
the applicant is requesting. Some of the research areas considered
include package integrity; risk assessment, management and mitigation;
emerging technologies; and human factors that may affect safety. In
addition, an OA evaluation provides mode-specific feedback,
particularly regarding operational controls, and provides mode-specific
information and recommendations concerning task and/or procedure
equivalency with the HMR and the applicant's fitness. PHMSA also
coordinates discussions with an OA to resolve any differences
concerning these assessments. Based on these analyses, the OHMS
Associate Administrator (AA), or the approving official to which the AA
has delegated this responsibility, such as an authorized OA official,
determines whether the requested proposal meets the required criteria.
If the application meets the criteria, the Approvals and Permits
Division staff or delegated approving official issues the special
permit or approval, along with the agency-specified modifications, if
applicable, and documents the results of the evaluation and cause for
approval. If the AA or delegated approving official determines that the
application does not meet the required criteria, the Approvals and
Permits Division staff and, if the application was coordinated, the OA,
documents the results of the evaluation and the cause for denial.
    i. Special Permit--The purpose of the evaluation phase is to: (1)
Determine if the application is complete and the actions or processes
it requests demonstrate a level of safety at least equal to the HMR or
that is consistent with the public interest, and (2) assess if an
applicant is fit to operate under a special permit, as provided in
Sec. Sec.  107.113(f)(4) and 107.113(f)(5). Applicants applying for a
renewal or party status to an existing authorized special permit are
not subject to an evaluation of the tasks requested in the special
permit, but are subject to a fitness review to determine the
applicant's ability to carry out these tasks.
    ii. Emergency Special Permit--The purpose of the evaluation phase
is to determine if the application is complete and in conformance with
the requirements prescribed in Sec.  107.117, and if an applicant is
fit to operate under a special permit, as provided in Sec. Sec.
107.113(f)(4) and 107.113(f)(5). When PHMSA finds that an emergency
basis does exist for the issuance of a special permit, in the same
manner as with a non-emergency special permit, PHMSA will determine a
schedule responsive to the timing needs and/or associated risks of the
emergency. If PHMSA finds that an emergency does not exist, the
application will be processed in the same manner as a non-emergency
special permit.
    iii. Approval--The purpose of the evaluation phase is to determine
if the application is complete and: (1) If an approval is necessary for
the type of activity the applicant wants to perform; (2) if the
activity requested is safe and complies with the regulations for its
specific approvals category; and (3) if the applicant or registered
user is qualified to hold and successfully carry out the tasks
prescribed in an approval, as provided in Sec. Sec.  107.402,
107.709(d)(4) or 107.709(d)(5).
    D. Disposition Phase. PHMSA issues the following final dispositions
to the applicant in writing: (1) ``Reject,'' if the application is
incomplete or insufficient to determine an equal level of safety 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; (2) ``Deny,'' if the
application does not provide an equal level of safety or the applicant
is not fit to operate under a special permit or approval; or (3)
``Issue,'' if the application is approved and the special permit or
approval is issued, with appropriate guidance for its safe operation if
applicable.
    i. Special Permit--Once a decision has been made to issue or deny a
special permit, the applicant will be notified in writing with the
Document or Denial Letter, as provided in Sec.  107.113(g). If PHMSA
denies an application for a special permit, the applicant may request
reconsideration as provided in Sec.  107.123 and, if PHMSA denies the
reconsideration, the applicant may appeal, as provided in Sec.
107.125. Reconsiderations and appeals must state, in detail, any errors
in the denial, provide additional information that may impact the
disposition, and state the modification of the final decision sought.
PHMSA will process special permit reconsiderations and appeals in the
same manner that the HMR require for new applications.
    ii. Approval--Once a decision has been made to issue or deny an
approval, the applicant will be notified in writing with the Approval
or Denial Letter as provided in Sec. Sec.  107.403 and 107.709(f). If
PHMSA denies an application for an approval, 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.
Reconsiderations and appeals must state, in detail, any errors in the
denial, provide additional information that may impact the disposition,
and state the modification of the final decision sought. PHMSA will
process approval reconsiderations and appeals in the same manner that
the HMR require for new applications.

IV. Special Permit and Approval Application Evaluation Criteria

    PHMSA currently uses a variety of methods to assess the safety
level of each applicant's request and the applicant's fitness. These
include a detailed technical review of the information in each
application, telephone and/or in-person interviews with the applicants
or their representative, and/or inspections. PHMSA also uses incident
reports received from industry, safety and performance data from other
federal, state, and local agencies, and information from scientific and
technical handbooks, journals, and texts.
    As mentioned earlier in this preamble, to fulfill this assessment
responsibility, PHMSA coordinates the review of special permit and
approval applications with the appropriate OA if the tasks requested in
the application meet specific criteria, or if the OA specifically
requests participation. The OA's review the application materials,
conduct a technical evaluation, and provide their comments and
recommendations, which may include recommendations for operational
restrictions or limitations for the special permit. If an OA does not
concur, the Project Officer works with that OA to resolve any issues.
If the agency PHMSA or the HMR designates as responsible for making
this determination finds that as a result of these analyses the
requested proposal meets the safety conditions prescribed in the HMR,
it documents the results of the evaluation and advances the application
for further processing; otherwise it documents the results of the
evaluation and the cause for denial.
    PHMSA's Field Operations Division and/or the appropriate OA are
responsible for conducting HMR compliance inspections and
investigations. The Field Operations Division is also responsible for
conducting safety profile reviews and determining an applicant's
fitness following the safety profile review. Similar to the initial
review process of a special permit or approval application, PHMSA
coordinates special permit and approval safety profile reviews and
fitness determinations with the

appropriate OA for its subject-matter expertise and to improve process
efficacy. The Field Operations Division or OA may recommend audits of
the applicant's operations when determining the applicant's fitness.
The Field Operations Division is also responsible for taking
enforcement actions for violations of the HMR (such as issuing warning
letters and tickets, and recommending civil and criminal penalties),
and providing training.
    Prior to 2010, PHMSA's methods for evaluating special permits and
approval applicants did not allow us to easily assess the fitness of
all parties authorized to use a special permit, such as parties to
special permits issued to large organizations like industry groups and
associations for the use of their members, single holders with multiple
facility locations, or new or smaller businesses with little or no
hazmat incident or field inspection histories. Without this
information, PHMSA principally relied on the safe practices inherent in
each special permit to maintain the safety of the hazardous materials
transported under their authorization. An internal review found this
method to be insufficient to ensure public safety and determine an
applicant's fitness. As a result, PHMSA no longer issues special
permits to industry associations and limits a special permit's scope to
a specific location.
    Since 2010, PHMSA has conducted approximately 12,250 special permit
fitness evaluations. The following lists the number of applications
PHMSA denied over the last four years:

 2010: 126
 2011: 429
 2012: 119
 2013: 42.

    As of June 20, 2013, these include applications PHMSA denied for
being technically unjustified and for applicants PHMSA denied for being
unfit.

    Since 2010, PHMSA has conducted approximately 105,000 approval
fitness evaluations, and denied the following approval applications,
listed by type and year.

                        Table 1--Denied Approvals
                          [Date Run: 6/21/2013]
------------------------------------------------------------------------
                                                              Number of
     Effective calendar year             Approval type        approvals
------------------------------------------------------------------------
2010.............................  COMPETENT AUTHORITY.....           56
2010.............................  EXPLOSIVE...............          453
2010.............................  FIREWORK................        6,699
2010.............................  MANUFACTURER SYMBOL.....            1
2010.............................  REQUALIFIER.............            9
2011.............................  COMPETENT AUTHORITY.....           47
2011.............................  EXPLOSIVE...............           15
2011.............................  FIREWORK................        6,227
2011.............................  REQUALIFIER.............           12
2012.............................  COMPETENT AUTHORITY.....           37
2012.............................  EXPLOSIVE...............           70
2012.............................  FIREWORK................        4,656
2012.............................  REQUALIFIER.............            6
2013.............................  COMPETENT AUTHORITY.....           16
2013.............................  CYLINDER REQUALIFIER                1
                                    (VISUAL).
2013.............................  EXPLOSIVE...............           52
2013.............................  FIREWORK................        2,342
2013.............................  REQUALIFIER.............            3
------------------------------------------------------------------------

    Based on information gathered while evaluating special permit and
approval applications and during field inspections, PHMSA determined
there was a gap in our oversight and fitness review process. To address
this concern and improve the overall efficiency of the fitness review,
PHMSA established a Fitness Restructuring Team and assigned it the
following tasks:
     Define what criteria PHMSA should use to trigger fitness
reviews;
     Evaluate the adequacy of the current three-tier fitness
review system; and
     Recommend processes that will improve efficiency and
eliminate or prevent future fitness evaluation backlogs exceeding 60
days.

This team also clarified and revised the fitness evaluation process to
include these items:

     All applications receive an automated review;
     The technical review runs concurrently with the automated
review;
     Use four years of data for all determinations;
     Conduct a safety profile review based on the triggers in
Table 2, entitled ``Safety Profile Review and On-Site Inspection
Triggers'' (which appears later in this preamble);
     Conduct an On-Site Inspection based on the triggers in
Table 2; and
     Establish conditions under which an applicant may be
capable of complying with the approval or special permit, and what
safety deficiencies may cause a determination of ``Unfit.''
    The team developed a risk model that mandates the automated initial
fitness review described in this paragraph. If an applicant does not
pass, a safety profile review and/or on-site inspection, as
appropriate, will be conducted by PHMSA's Field Operations Division
staff or a modal partner. To ensure the correct company is assessed,
each application is assigned a unique identifier (currently the
organization's Data Universal Numbering System (DUNS) number). In this
model, PHMSA uses automated processing to compare an applicant's
performance history to our inspection data and make a determination
based on the risk model shown in Table 2 below. This automated review
flags entities that meet one or more of the triggers identified in
Table 2. If any item in the left column of Table 2 is identified during
the automated review, a safety profile review is triggered. If any item
in the right column of Table 2 is identified during the automated
review or safety profile review, an on-site inspection is triggered. If
PHMSA previously

conducted a safety profile review of a company, the new safety profile
review will start from the date after the last safety profile review
was completed. After a review or inspection of an applicant is
complete, including modal coordination if appropriate, PHMSA's Field
Operations Division staff will submit a fitness memorandum with a
recommendation of fit or unfit, with justification, to the Approvals
and Permits Division. PHMSA believes, based on the results of this
effort, that the revised SOPs it is proposing in this rulemaking will
offer a more effective way to determine an applicant's potential
fitness to operate under a special permit or approval.

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

V. Miscellaneous Proposals

i. Clarifying the Definitions for Special Permits and Approvals

    The current definitions in 49 CFR 105.5, 107.1, and 171.8 for
``special permits'' and ``approvals'' state that other designated
Department officials may also issue these documents under the HMR on
behalf of PHMSA's Associate Administrator for Hazardous Materials
Safety. This is not entirely correct. As stated earlier in this
preamble, 49 U.S.C. 5117(a) of the Federal hazmat law gives the
Secretary of Transportation the authority to issue, modify, or
terminate a special permit that varies from 49 U.S.C. Chapter 51,
entitled ``Transportation of Hazardous Materials,'' or a regulation
prescribed under 49 U.S.C. 5103(b), 5104, 5110, or 5112. These
regulations apply to a person who performs a function regulated by the
Secretary under Sec.  5103(b)(1) in a way that achieves a safety level
at least equal to the safety level required under 49 U.S.C. Chapter 51,
or that is consistent with the public interest and chapter 51, if a
required safety level does not exist. PHMSA is the administration
within DOT that is primarily responsible for implementing the Federal
hazmat law and, through the HMR, issuing special permits.
    Under the Federal hazmat law, the Secretary has general regulatory
authority to issue competent authority approvals or to designate this
authority to PHMSA's Associate Administrator. Since PHMSA's inception
as the Materials Transportation Board, and later as the Research and
Special Programs Administration, it has served as the Department's
Competent Authority for the transportation of hazardous materials and,
through the HMR, has issued approvals concerning the transportation of
hazardous materials. In the HMR, PHMSA also delegates limited authority
to other Department modal agencies to issue approvals in specific
situations. To reflect this delegation of authority, PHMSA is proposing
to revise the definitions in Sec. Sec.  105.5, 107.1, and 171.8 for
``special permits'' and ``approvals'' to clarify that an approval and
special permit may be issued only by the Associate Administrator, the
Associate Administrator's designee, or as otherwise prescribed in the
HMR. In addition, PHMSA proposes minor editorial revisions to the
approval's definition in Sec.  105.5 to make it identical with the
definition for an approval in Sec.  171.8.

ii. Clarifying That an Approval Application Is Subject to the HMR When
Submitted to Other Agencies

    Through several sections in the HMR, PHMSA authorizes that certain
types of approval requests can be submitted directly to other
Department and federal agencies.\1\ Some of these agencies have
reported the volume of approval applications they receive can be
substantial. For example, the FRA reports that it processed
approximately 5,500 One-Time Movement approvals in 2013 and expects to
process a similar number in 2014. The FRA also issues approvals for
hazardous materials in trailer-on-flat-car (TOFC) and container-on-
flat-car (COFC) service, alternative inspection procedures, and
railcars with gross weight loads up to 286,000 pounds. Also, PHMSA has
learned from our modal agency partners that approval applications they
receive often are not complete and, therefore, do not comply with the
requirements prescribed in Sec.  107.701. These agencies report
processing incomplete approval applications is administratively
burdensome and delays their issuance. PHMSA emphasizes that Sec.
107.701(b) specifically states the procedures prescribed for approvals
under Subpart H of Part 107 ``. . . are in addition to any requirements
in subchapter C of this chapter applicable to a specific approval,
registration or report.'' These procedures apply to all approval
applications submitted to perform a function that requires prior
consent under the HMR, regardless of the authorized agency. Section
107.701(b) also states ``if compliance with both a specific requirement
of subchapter C of this chapter and a procedure of this subpart is not
possible, the specific requirement applies.'' However, approval
registrations issued under 49 CFR Part 107, Subpart F (Registration of
Cargo Tank and Cargo Tank Motor Vehicle Manufacturers, Assemblers,
Repairers, Inspectors, Testers, and Design Certifying Engineers) and G
(Registration of Persons Who Offer or Transport Hazardous Materials)
are not subject to these procedures (see Sec.  107.701(c)). PHMSA
invites the public to recommend ways to convey this requirement to
applicants who apply for approvals through other agencies, as
authorized under the HMR.
---------------------------------------------------------------------------

    \1\ See Sec. Sec.  173.301, 173.471, 174.50, 174.63, 175.9,
179.13, 180.417, and 180.509.
---------------------------------------------------------------------------

VI. Summary Review of Proposed Amendments

    In this NPRM, PHMSA is proposing 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 its existing
administrative procedures for

processing special permits and approval applications. These proposed
actions are summarized below.

Sec.  105.5

    In Sec.  105.5, we propose 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.

Sec.  107.1

    In Sec.  107.1, we propose 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 propose 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 propose 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 propose 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 propose 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 propose to add new Appendix A to incorporate
PHMSA's existing Standard Operating Procedures for processing special
permits and approval applications.

Sec.  171.8

    In Sec.  171.8, we propose 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.

VII. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

    This NPRM 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 Sec. Sec.  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 NPRM is also established
under the authority of Sec.  33012(a) of MAP-21 (Pub. L. 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 NPRM, PHMSA is addressing the provisions
in the Act.

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

    This proposed rule is considered a significant regulatory action
under Sec.  3(f) of Executive Order 12866 and was reviewed by the
Office of Management and Budget (OMB). The proposed rule is considered
a significant rule under the Regulatory Policies and Procedures order
issued by the Department of Transportation [44 FR 11034]. 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. These two
Executive Orders 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.''
    In this notice, PHMSA proposes to amend 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 proposed
rule would reduce the paperwork burden on industry and this agency
resulting from delays when processing incomplete applications. Taken
together, the provisions of this proposed 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.
    The impact of this proposed 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. This will ease the administrative costs of submitting a
special permit and approval application and improve processing times.
Although it is difficult to quantify the savings, many special permits
and approvals have economically impacted companies by improving the
efficacy 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 NPRM does not
impose any costs on industry. Although a slight reduction in the costs
associated with processing delays may provide nominal benefits,
generally, this proposed rule affects only agency procedures;
therefore, we assume no change in current industry costs or benefits.

C. Executive Order 13132

    This proposed rule was analyzed in accordance with the principles
and criteria contained in Executive Order 13132 (``Federalism''). This
proposed 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 proposed 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 proposed rule was analyzed in accordance with the principles
and criteria contained in Executive Order 13175 (``Consultation and
Coordination with Indian Tribal Governments''). Because this proposed
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 proposed rule conceivably include all persons--shippers, carriers,
and others--who offer and/or transport in commerce hazardous materials.
The specific focus of the proposed rule is to incorporate standard
procedures to assess an applicant's fitness to perform the required
tasks to receive the relief from the HMR that each applicant is
requesting. Overall, this proposed 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. Therefore, we certify that this NPRM will not have a significant
economic impact on a substantial number of small entities.
    This proposed 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 proposed 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 NPRM'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 NPRM 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
proposed rule affects only agency procedures; therefore, this proposed
rule contains no new information collection requirements subject to the
PRA. Further, this NPRM 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. However, if any regulated entities
determine they will incur information and recordkeeping costs as a
result of this NPRM, PHMSA requests that they provide comments on the
possible burden developing, implementing, and maintaining records and
information these proposed requirements may impose on businesses
applying for a special permit or approval.
    Because PHMSA determined this proposed rule does not result in
information collection and recordkeeping burdens, PHMSA did not assess
its potential information collection costs. However, if information on
this matter should become available or if commenters have questions
concerning information collection on this NPRM, please direct your
comments or questions to Steven Andrews, Deborah Boothe, or T. Glenn
Foster, Standards and Rulemaking Division, Pipeline and Hazardous
Materials Safety Administration, 1200 New Jersey Avenue SE.,
Washington, DC 20590-0001, Telephone<PHONE_NUMBER>.
    Address written comments to the Dockets Unit as identified in the
ADDRESSES section of this rulemaking. We must receive comments
regarding information collection burdens prior to the close of the
comment period identified in the DATES section of this rulemaking. In
addition, you may submit comments specifically related to the
information collection burden to the PHMSA Desk Officer, Office of
Management and Budget, at fax number<PHONE_NUMBER>.

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 proposed 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 Notice proposes to revise the HMR to include the standard
operating procedures and criteria used to evaluate applications for
special permits and approvals. This rulemaking also proposes to provide
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. 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 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 NPRM 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
NPRM action can be found in the preamble to this NPRM. 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 this 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 are proposing 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 provided in 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 this NPRM are 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.
Comments From Agencies and Public
    PHMSA solicits comments about potential environmental impacts
associated with this NPRM from other agencies, stakeholders, and
citizens.

J. Privacy Act

    Anyone is able to search the electronic form of all comments

received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (Volume 65, Number 70, pages 19477-78), which may be
viewed at ``http://www.gpo.gov/fdsys/pkg/FR-2000-04-11/pdf/00-
8505.pdf''.

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 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 proposed rule to ensure that it does not
cause unnecessary obstacles to foreign trade. Accordingly, this NPRM is
consistent with E.O. 13609 and PHMSA's obligations.

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 proposing to amend 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, the definitions for ``approval'' and ``special
permit'' are revised in alphabetical order 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, add the definitions for ``applicant fitness,'' ``fit
or fitness,'' ``fitness coordinator,'' ``insufficient corrective
action,'' and revise the definitions for ``approval,'' ``special
permit'' to 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 officer or
authorized Operating Administration (OA) representative that conducts
reviews regarding an organization's hazardous materials operations,
including such areas as accident history, 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 officer or authorized Operating Administration (OA)
representative has determined that evidence of an applicant's
corrective action in response to prior to enforcement cases is
insufficient and the basic safety management controls proposed for the
type of hazardous material, packaging,

procedures, and/or mode of transportation remain inadequate.
* * * * *
    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).
* * * * *
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 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 within 15 days of receipt of an
application for renewal of a special permit. If an application is
determined to be incomplete, PHMSA may reject the application. 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 issue 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.  107.709, 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 reviews an application for an
approval, 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, PHMSA may deem the application incomplete and
deny it. The Associate Administrator may grant a 30-day extension if
the applicant makes such a request in writing.
* * * * *
0
8. Add new 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 171-180. It is a guidance
document to be used by PHMSA for the internal management of its special
permit and approval programs.
    A special permit is 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). An approval is 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). PHMSA receives applications for: (1)
Designation as an approval or certification agency, (2) renewal or
modification of a special permit or an approval, (3) granting of party
status to a special permit, and (4) 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, and proceed in the following order.

                              Special Permit And Approval Evaluation Review Process
----------------------------------------------------------------------------------------------------------------
                                          Non-classification
            Special permit                     approval         Classification approval   Registration approval
----------------------------------------------------------------------------------------------------------------
1. Completeness......................  1. Completeness........  1. Completeness........  1. Completeness.
2. Publication.......................  2. Evaluation..........  2. Evaluation..........  2. Evaluation.
                                         a. Technical.........    a. Technical.........    a. Fitness only.
                                         b. Fitness...........
3. Evaluation........................  3. Disposition.........  3. Disposition.........  3. Disposition.
    a. Technical.....................    a. Approval..........    a. Approval..........    a. Approval.
    b. Fitness.......................    b. Denial............    b. Denial............    b. Denial.
4. Disposition                         .......................
    a. Approval.
    b. Denial.
5. Reconsideration...................  4. Reconsideration.....  4. Reconsideration.....  4. Reconsideration.
----------------------------------------------------------------------------------------------------------------

    A non-classification approval 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. A classification approval 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 or Sec.  107.705 (for an
approval). If PHMSA determines an application is incomplete or
insufficient, PHMSA may reject the application. If PHMSA rejects the
application, it 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 for PHMSA 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). The
public has 30 days to comment on a new special permit and 15 days to
comment on a request for modification of an existing special permit.
    3. Evaluation. The evaluation phase consists of two assessments:
Technical evaluation and fitness evaluation. These evaluations may be
done concurrently and are described in greater detail below. When
applicable, PHMSA consults and coordinates its evaluation of
applications with the following Operating Administration (OA) 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 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. If an OA does not concur with PHMSA's
recommendation based on the evaluation, PHMSA works with the OA to
resolve their concerns.
    (b) Fitness evaluation. Each applicant for a special permit or non-
classification approval is subject to a fitness evaluation to assess if
the applicant is fit to conduct the activity authorized by the special
permit or approval application. PHMSA will coordinate fitness reviews
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
requests participation. PHMSA does not conduct initial fitness 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 fitness review model.
    (i) Automated Review. An applicant for a special permit or approval
which requires a fitness evaluation is subject to an automated fitness
review. If the applicant passes the initial automated review, the
applicant is determined to be fit. To begin this review, PHMSA or the
applicant enters the applicant's information into the Hazardous
Materials Information System (HMIS) or the Hazmat Intelligence Portal
(HIP), web-based applications 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 one of the following occurred:
    (1) A death or injury;
    (2) Two or more incidents involving a Sec.  172.504(e) (placarding)
Table 1 hazardous material;
    (3) Three or more incidents involving a bulk packaging;
    (4) The applicant has a prior enforcement case referral where the
Deputy Associate Administrator for Field Operations, or the Deputy
Associate Administrator's designee determined insufficient corrective
action was taken, or there are Independent Inspection Agency (IIA)
noted items on a cylinder requalifier inspection report, except for
those applicants who were reinspected and found to have no violations;
    (5) The applicant is a foreign cylinder manufacturer or
requalifier, or a select holder that PHMSA or a representative of the
Department has never inspected; or
    (6) 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 review. A fitness coordinator, as defined in
Sec.  107.1, conducts a safety profile review of all applicants meeting
one of the criteria listed earlier in this appendix under ``automated
review.'' In a safety profile review, 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 also performs the review if two or more modes of
transportation are requested in the application. The applicable OA
performs the review if one mode of transportation is requested in the
application. After conducting a review, 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, to perform an on-site inspection.
After the safety profile review is completed, if the applicant is not
selected for an on-site inspection, the applicant is determined to be
fit.
    (iii) On-Site Inspection. (A) PHMSA considers the factors in
paragraph 3(b) 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 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 reinspected with no violations noted;
    (3) Items noted by an IIA on a cylinder requalifier inspection
report, except when reinspected with no violations noted; or
    (4) The applicant is a foreign cylinder manufacturer or requalifier
that has never been inspected under current criteria.
    (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 or an
existing special permit, 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; 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 PHMSA 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, in writing, with a brief
statement 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. (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
9. 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
10. In Sec.  171.8, the definitions for ``approval,'' ``special
permit'' are revised in alphabetical order 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, under the authority delegated in 49
CFR 1.97.
Magdy El-Sibaie,
Associate Administrator for Hazardous Materials Safety, Pipeline and
Hazardous Materials Safety Administration.
[FR Doc. 2014-18925 Filed 8-11-14; 8:45 am]
BILLING CODE 4910-60-P