[Federal Register: June 22, 2007 (Volume 72, Number 120)]
[Notices]
[Page 34495-34498]
[DOCID:fr22jn07-93]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55919; File No. SR-CBOE-2007-62]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Amend the CBOE's Rules Related to Credit Default Options

June 18, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 15, 2007, the Chicago Board Options Exchange, Incorporated
( ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared
substantially by the Exchange. The Exchange has designated the proposed
rule change as one constituting a stated policy, practice, or
interpretation with respect to the meaning, administration, or
enforcement of an existing rule under Section 19(b)(3)(A)(i) of the Act
\3\ and Rule 19b-4(f)(1) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its rules pertaining to Credit
Default Options (``CDOs'') in order to: (i) Eliminate the requirement
that a Market-Maker obtain a separate letter of guarantee to trade CDOs
and the requirement that a Floor Broker obtain a separate letter of
authorization to trade CDOs; (ii) provide that, for purposes of CDOs,
references in the Exchange Rules to the ``appropriate committee'' shall
be read to be the ``Exchange;'' (iii) make certain non-substantive
clarifications with respect to the CDO provisions pertaining to
Redemption Events; (iv) provide for the exclusion of certain debt
securities from the definitions of ``Reference Obligation'' and
``Relevant Obligations'' and establish certain minimum threshold
amounts for purposes of identifying the occurrence of a ``Credit
Event;'' and (v) modify the

provisions pertaining to rights and obligations of CDO holders and
writers and certain disclaimers. The text of the proposed rule change
is available on the Exchange's Web site (http://www.cboe.org/legal), at

the Exchange's principal office, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently received approval to list and trade CDOs,
which are binary call options based on Credit Events \5\ in one or more
debt securities of an issuer or guarantor.\6\ Before the initiation of
trading in CDOs, the Exchange wishes to make certain changes to its new
Chapter XXIX, which contains the rules applicable to CDOs.
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    \5\ A ``Credit Event'' occurs when a Reference Entity has a
Failure-to-Pay Default on, any other Event of Default on, and/or a
Restructuring of the Relevant Obligation(s). Failure-to-Pay
Defaults, Events of Default, and Restructurings are defined in
accordance with the terms of the Relevant Obligation(s). See CBOE
Rule 29.1(c) and note 8, infra.
    \6\ See Securities Exchange Act Release No. 55871 (June 6,
2007), 72 FR 32372 (June 12, 2007) (SR-CBOE-2006-84).
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    First, the Exchange is eliminating Rule 29.18, Letter of
Authorization or Guarantee, which currently requires that: (i) No
Market-Maker shall effect any transaction in CDOs unless one or more
Letter(s) of Guarantee has been issued by an Exchange Clearing Member
and filed with the Exchange accepting financial responsibility for all
CDO transactions made by the Market-Maker; and (ii) no Floor Broker
shall act as such in respect of CDO contracts unless a Letter of
Authorization has been issued by an Exchange Clearing Member and filed
with the Exchange. The Exchange is eliminating these requirements
because they create a duplicative and unnecessary administrative burden
since Market-Makers and Floor Brokers must already submit Letters of
Guarantee or Authorization pursuant to Rules 8.5, Letters of Guarantee,
and 6.72, Letters of Authorization, as applicable, and CDOs would be
subject to such existing Letters.
    Second, the Exchange is proposing to adopt new Rule 29.18, Exchange
Authority, which will provide that, for purposes of options that are
subject to Chapter XXIX, references in the Exchange Rules to the
``appropriate committee'' shall be read to be to the ``Exchange.'' \7\
The Exchange is proposing to make this change because it may determine
to assign these authorities with respect to options that are subject to
Chapter XXIX, including CDOs, to committees and/or Exchange staff. In
making this change, the Exchange will have the flexibility to delegate
the authorities under the rules with respect to options that are
subject to Chapter XXIX, including CDOs, to an appropriate committee or
appropriate Exchange staff and will not have to make a rule change
merely, for instance, to accommodate the reassignment of any such
authority.
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    \7\ Thus, for example, references to determinations regarding
the applicable opening parameter settings established by the
``appropriate Procedure Committee'' in Exchange Rule 6.2B, Hybrid
Opening System (``HOSS''), shall be read to be by the ``Exchange.''
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    Third, the Exchange is making some non-substantive clarifications
with respect to the provisions of Rule 29.4, Adjustments, that pertain
to Redemption Events.\8\ Specifically, the Exchange is substituting the
phrase ``Redemption Event'' for ``Redemption'' in three locations in
subparagraph (a)(2) for grammatical consistency in the rule text. The
Exchange is also inserting the phrases ``or maturity'' in subparagraph
(a)(2)(i) and ``or matures'' in subparagraph (a)(2)(ii) in order to
clarify that the definition of a ``Redemption Event'' includes the
redemption or maturity of the Reference Obligation and of all other
Relevant Obligations and, if a Reference Obligation is redeemed or
matures but other Relevant Obligation(s) remain, a new Reference
Obligation would be specified from among the remaining Relevant
Obligation(s). The Exchange is also inserting language into this
provision that clarifies that the substitution of a new Reference
Obligation in these two particular scenarios (i.e., if the Reference
Obligation is redeemed or matures but other Relevant Obligation(s)
remain) would not be deemed a Redemption Event. These changes to the
rule text simply make clear the Exchange's intent with respect to the
impact of maturity.
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    \8\ A ``Redemption Event'' is defined in accordance with the
terms of the Relevant Obligation(s) and includes the redemption of
the Reference Obligation and of all other Relevant Obligations. A
``Reference Obligation'' is a specific debt security of an issuer or
guarantor that underlies a CDO. The set of the Reference Obligation
and any other debt security obligation(s) of the issuer or guarantor
that underlie a CDO are referred to as the ``Relevant Obligations.''
See CBOE Rules 29.1(c) and 29.4(a)(2)(i); see also proposed
amendments to Rule 29.1(c) described below.
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    Fourth, the Exchange is proposing to clarify that non-recourse debt
is excluded from the definitions of Reference Obligation and Relevant
Obligations as set forth in Rule 29.1(c). The Exchange is proposing to
exclude non-recourse indebtedness because this type of debt security is
generally secured by collateral, which is the only asset the holder of
debt security may look to for satisfaction to cover the defaulted
amount. The Exchange does not intend to list and trade CDOs (and other
types of credit products) that are based on non-recourse debt and
therefore believes its exclusion from the definitions is appropriate.
The Exchange also believes that exclusion of non-recourse debt is
consistent with the purpose of CDOs to afford investors protections
linked to the Reference Entity's creditworthiness.
    In addition, the Exchange is proposing to include a minimum
threshold amount for purposes of identifying the occurrence of Failure-
to-Pay Defaults, Events of Default, and Restructurings. For a Failure-
to-Pay Default, the minimum failure-to-pay amount, whether individually
or in the aggregate, shall be the greater of $750,000 or the amount
specified in the terms of the Relevant Obligation(s). This provision
would override any contradictory provision in the terms of the Relevant
Obligation(s) terms regarding the minimum amount of non-payment that
triggers a Failure-to-Pay Default. For an Event of Default or
Restructuring, the default or restructuring (as applicable) must relate
to a principal amount of the Relevant Obligation(s), whether
individually or in the aggregate, that is the greater of $7.5 million
or the amount specified in the terms of the Relevant Obligation(s).
These provisions would override any contradictory provisions in the
terms of the Relevant Obligation(s) regarding the minimum principal
amount necessary to trigger an Event of Default or Restructuring. The
Exchange believes that establishing these minimum threshold amounts is
appropriate and will assist in the administration of the Credit Event
confirmation process. These minimum threshold amounts are designed to
ensure that a de minimis

failure-to-pay, default, or restructuring will not trigger a Credit
Event and, thus, the Exchange believes they are in keeping with the
purpose of CDOs to afford investors protections linked to the Reference
Entity's creditworthiness.
    Finally, the Exchange is proposing to modify Rule 29.10, Rights and
Obligations of Holders and Sellers, to change the title of the rule to
Disclaimers, remove certain redundancies, and replace the disclaimer
provision contained in the text with a provision that is more
consistent with other existing Exchange rules. Specifically with
respect to redundancies, the Exchange is proposing to delete paragraph
(a) of the rule, which currently provides that, subject to certain
other Exchange rules, the rights and obligations of holders and sellers
of CDOs dealt in on the Exchange shall be set forth in the By-Laws and
Rules of The Options Clearing Corporation (``OCC''). This language is
duplicative considering Rule 5.2, Rights and Obligations of Holders and
Sellers, contains substantively similar language. Paragraph (a) also
currently provides that Rules 11.1, Exercise of Option Contracts, and
11.2, Allocation of Exercise Notices, are not applicable to CDOs. The
Exchange is proposing to delete this language because it is duplicative
considering Rule 29.9, Determination of Credit Event, Automatic
Exercise and Settlement.\9\ With respect to disclaimers, the Exchange
is proposing to delete paragraph (b) of the rule, which currently
contains disclaimer language limiting the Exchange's liability.\10\
This provision would be replaced with disclaimer language \11\ that the
Exchange believes is more consistent with its other disclaimer rules
relating to reporting authorities, including Rule 24.14, Disclaimers.
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    \9\ The reference at the end of Rule 29.9 currently provides
that, for purpose of Chapter XXIX, Rule 29.9 replaces Rule 11.1. The
Exchange is also proposing to amend this reference to make it clear
that Rule 11.2 is not applicable to CDOs.
    \10\ Specifically, existing Rule 29.10(b) currently provides
that, ``[t]he Exchange shall have no liability for damages, claims,
losses or expenses caused by any errors, omissions or delays in
confirming or disseminating notice of any Credit Event resulting
from a negligent act or omission by the Exchange or any act,
condition or cause beyond the reasonable control of the Exchange,
including, but not limited to, an act of God; fire; flood;
extraordinary weather conditions; war; insurrection; riot; strike;
accident; action of government; communications or power failure;
equipment or software malfunction; any error, omission or delay in
the reports of transactions in one or more underlying securities.''
    \11\ Revised Rule 29.10 would provide that, ``The term
`reporting authority' as used in this rule refers to the Exchange or
any other entity identified by the Exchange as the `reporting
authority' in respect of a class of [CDOs] for purposes of the By-
Laws and Rules of [OCC] and any affiliate of the Exchange or any
such other entity. No reporting authority makes any warranty,
express or implied, as to the results to be obtained by any person
or entity from the use of any [CDO]. Any reporting authority hereby
disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to any [CDO]. Any reporting
authority shall have no liability for any damages, claims, losses
(including any indirect or consequential losses), expenses or
delays, whether direct or indirect, foreseen or unforeseen, suffered
by any person relating to any [CDO], including without limitation as
a result of any error, omission or delay in confirming, or
disseminating notice of, any Credit Event, any determination to
adjust or not to adjust the terms of outstanding [CDOs], or any
other determination with respect to [CDOs] for which it has
responsibility under the By-Laws and Rules of [OCC].''
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations under the Act applicable to
national securities exchanges. Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) of the
Act,\12\ which requires that the rules of an exchange be designed to
promote just and equitable principles of trade, to prevent fraudulent
and manipulative acts, to remove impediments to and to perfect the
mechanism for a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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    \12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the
proposal.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing rule change constitutes a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule, it has become
effective pursuant to Section 19(b)(3)(A)(i) of the Act \13\ and Rule
19b-4(f)(1) thereunder.\14\ At any time within 60 days of the filing of
the proposed rule change, the Commission may summarily abrogate such
rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(i).
    \14\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-CBOE-2007-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-CBOE-2007-62. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of CBOE. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-CBOE-2007-62 and should be submitted on or before July 13, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-12079 Filed 6-21-07; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 80, Number 95 (Monday, May 18, 2015)]
[Notices]
[Page 28267]
[FR Doc No: 2015-11933]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-SFUND-2015-0100; FRL--9927-27-OEI]

Information Collection Request Submitted to OMB for Review and
Approval; Comment Request; Continuous Release Reporting Regulations
(CRRR) Under CERCLA 1980 (Renewal)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: The Environmental Protection Agency (EPA) has submitted an
information collection request (ICR), ``Continuous Release Reporting
Regulations (CRRR) Under CERCLA 1980 (Renewal)'' (EPA ICR No. 1445.12,
OMB Control No. 2050-0086) to the Office of Management and Budget (OMB)
for review and approval in accordance with the Paperwork Reduction Act
(44 U.S.C. 3501 et seq.). This is a proposed extension of the ICR,
which is currently approved through June 30, 2015. Public comments were
previously requested via the Federal Register (80 FR 7460) on February
10, 2015 during a 60-day comment period. This notice allows for an
additional 30 days for public comments. A fuller description of the ICR
is given below, including its estimated burden and cost to the public.
An agency may not conduct or sponsor and a person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number.

DATES: Additional comments may be submitted on or before June 17, 2015.

ADDRESSES: Submit your comments, referencing Docket ID Number EPA-HQ-
SFUND-2015-0100, to (1) EPA online using www.regulations.gov (our
preferred method), by email to<EMAIL_ADDRESS>or by mail to:
EPA Docket Center, Environmental Protection Agency, Mail Code 28221T,
1200 Pennsylvania Ave. NW., Washington, DC 20460, and (2) OMB via email
to<EMAIL_ADDRESS>Address comments to OMB Desk Officer
for EPA.
    EPA's policy is that all comments received will be included in the
public docket without change including any personal information
provided, unless the comment includes profanity, threats, information
claimed to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute.

FOR FURTHER INFORMATION CONTACT: Elizabeth Bosecker, Regulations
Implementation Division, Office of Emergency Management, (5104A),
Environmental Protection Agency, 1200 Pennsylvania Ave. NW.,
Washington, DC 20460; telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Supporting documents, which explain in
detail the information that the EPA will be collecting, are available
in the public docket for this ICR. The docket can be viewed online at
www.regulations.gov or in person at the EPA Docket Center, WJC West,
Room 3334, 1301 Constitution Ave. NW., Washington, DC. The telephone
number for the Docket Center is<PHONE_NUMBER>. For additional
information about EPA's public docket, visit http://www.epa.gov/dockets.
    Abstract: Section 103(a) of CERCLA, as amended, requires the person
in charge of a vessel or facility to immediately notify the National
Response Center (NRC) of a hazardous substance release into the
environment if the amount of the release equals or exceeds the
substance's reportable quantity (RQ). The list of hazardous substances
and the RQs can be found in Table 302.4 of 40 CFR 302.4.
    Section 103(f)(2) of CERCLA provides facilities relief from this
per-occurrence notification requirement if the hazardous substance
release at or above the RQ is continuous and stable in quantity and
rate. Under the Continuous Release Reporting Requirements (CRRR), the
facility must make an initial telephone call to the NRC, an initial
written report to the EPA Region, and, if the source and chemical
composition of the continuous release does not change and the level of
the continuous release does not significantly increase, a follow-up
written report must be submitted to the EPA Region one year after
submission of the initial written report. If the source or chemical
composition of the previously reported continuous release changes,
notifying the NRC and EPA Region of a change in the source or
composition of the release is required. Further, a significant increase
in the level of the previously reported continuous release must be
reported immediately to the NRC according to section 103(a) of CERCLA.
Finally, any change in information submitted in support of a continuous
release notification must be reported to the EPA Region. The reporting
of a hazardous substance release that is equal to or above the
substance's RQ allows the Federal government to determine whether a
Federal response action is required to control or mitigate any
potential adverse effects to public health or welfare or the
environment.
    Form Numbers: EPA Form 6100-10, Continuous Release Reporting Form.
    Respondents/affected entities: EPA expects a number of different
industrial categories to report hazardous substance releases under the
provisions of the CRRR.
    Respondent's obligation to respond: Mandatory per 40 CFR part 302
if respondents want to obtain reduced reporting for continuous
releases.
    Estimated number of respondents: 4,046.
    Frequency of response: On occasion.
    Total estimated burden: 325,582 hours (per year). Burden is defined
at 5 CFR 1320.03(b).
    Total estimated cost: $17,774,471 (per year), includes $165,111
annualized capital or operation & maintenance costs.
    Changes in the Estimates: There is an increase of 9,616 hours in
the total estimated respondent burden compared with the ICR currently
approved by OMB. This increase is due to applying a growth rate of
7.5%, which is consistent with prior years reporting.

Courtney Kerwin,
Acting Director, Collection Strategies Division.
[FR Doc. 2015-11933 Filed 5-15-15; 8:45 am]
 BILLING CODE 6560-50-P


expected cost of aircraft incidents involving lithium batteries.
    PHMSA weighs the relative probabilities of an incident occurring on
a cargo-only aircraft and a passenger aircraft by assuming on average
an 80% chance of an incident occurring onboard a cargo-only and 20%
chance on a passenger flight. This roughly matches the proportion of
total cargo that is carried on cargo-only aircraft and passenger
aircraft. The average expected incident has costs of $354 million,
which is $302 million when discounted at 3 percent, and $279 million
when discounted at 7 percent.
    Table 3-2-3 presents the number of incidents that would need to be
prevented in order for this rule to be cost-beneficial. For instance,
using the base case for costs, this rule would need to prevent more
than 0.041 incidents over the next 10 years, discounted at 3 percent,
for the benefits to exceed the costs.

      Table 3-2-3--Break-Even Points, Number of Incidents Prevented
------------------------------------------------------------------------
                                           Discounted 3%   Discounted 7%
------------------------------------------------------------------------
Low cost estimate.......................           0.029            0.03
Base case cost estimate.................           0.041           0.043
High case cost estimate.................           0.056           0.061
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C. Executive Order 13132

    The requirements in this rule will preempt state, local, and Indian
tribe requirements but do not have 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 government. Therefore, the consultation and funding
requirements of Executive Order 13132 do not apply.
    The Federal hazardous materials transportation law, 49 U.S.C. 5101
et seq., contains an express preemption provision (49 U.S.C. 5125(b))
preempting State, local, and Indian tribe requirements on the following
subjects:
    (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 material; or
    (5) The design, manufacture, fabrication, marking, maintenance,
recondition, repair, or testing of a packaging or container
represented, marked, certified, or sold as qualified for use in
transporting hazardous material.
    Federal hazardous materials transportation law provides at 49
U.S.C. 5125(b)(2) that, if DOT issues a regulation concerning any of
these subjects, DOT 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.
    This final rule addresses subject items (1), (2), (3), and (4)
above and preempts State, local, and Indian tribe requirements not
meeting the ``substantively the same'' standard. The effective date of
Federal Preemption is November 4, 2014.

D. Executive Order 13175

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

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

    This final rule has been developed in accordance with Executive
Order 13272, Proper Consideration of Small Entities in Agency
Rulemaking, and DOT's procedures and policies to promote compliance
with the Regulatory Flexibility Act (Pub. L. 96-354) and to ensure
potential impacts of rules on small entities are properly considered.
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to review regulations to assess their impact on small entities,
unless the agency determines that a rule is not expected to have a
significant impact on a substantial number of small entities.
1. Need for and Objectives of the Rule
    The intent of this action is to align the HMR with international
transport standards and requirements to the extent practicable in
accordance with Federal Hazardous Materials transportation law (see 49
U.S.C. 5120). Our goal is to harmonize, without diminishing the level
of safety currently provided by the HMR, and not impose undue burdens
on the regulated public. This action is necessary to incorporate
changes adopted in the UN Recommendations on the Transport of Dangerous
Goods--Model Regulations, the ICAO's Technical Instructions for the
Safe Transport of Dangerous Goods by Air, and the IMDG Code, effective
January 1, 2013.

2. Comments to the Initial Regulatory Flexibility Analysis
    PHMSA received comments on the initial regulatory flexibility
analysis from industry trade associations and SBA. Small businesses
including Fedco and ICCNexergy added figures detailing their expected
burden.
    SBA and PRBA stated that the proposed rules would create
conflicting standards and require significant supply chain redesigns.
Further, SBA stated that the initial regulatory flexibility analysis
understated the number of, and impact on, small businesses that support
the retail sector, including internet shippers, manufacturers of
battery packs, shipping companies, and airlines that handle lithium
batteries or electronic devices containing lithium batteries. SBA
recommended that PHMSA conduct further outreach to the regulated
community to enhance dialogue, promote safety and ensure harmonization.
    We have been attentive to the concerns of small businesses through
the preparation of the rule and its supporting analyses. Data provided
by several commenters suggested that a significant percentage of
lithium batteries transported in the U.S. affected by this rule are
packed with, or contained in, equipment and often those pieces of
equipment only contain one device per package. When developing the
rule, PHMSA examined alternatives for reducing the regulatory
compliance burden on small entities, including providing exceptions for
certain finished medical devices and extending the compliance date to
permit extra time for small entities to come into compliance. In this
final rule, we are maintaining existing exceptions:
     For the transport of lithium batteries by modes other than
aircraft (i.e. highway, rail and vessel), including batteries packed
with, or contained in, equipment; and
     for the air transport of packages containing up to 8 small
lithium cells or 2 small lithium batteries and lithium batteries packed
with, or contained in, equipment.
3. Description and Estimate of the Number of Small Entities to Which
the Final Rule Will Apply
    Two types of small businesses are likely to incur costs associated
with compliance with the provisions of this rule--(1) manufacturers and
distributors of lithium batteries and (2) air carriers. We employ the
thresholds published by the Small Business Administration for
industries subject to the HMR--generally, this includes those that have
up to 500 employees. Our research has identified 130 possible entities:
60 manufacturers and sellers, and 70 air transporters.
    PHMSA reviewed records of the potentially affected small
manufacturing and sales businesses by NAICS codes--discussed in greater
detail in the Regulatory Flexibility Analysis--and determined that of
the 60 identified:
     29 are classified as manufacturers of primary or storage
batteries;
     16 are classified as manufacturers of equipment, other
devices, or components of these articles;
     13 are classified as wholesalers of equipment or parts;
and
     2 are engaged in research and development.
    Through the preparation of this analysis, there has been no
evidence of retailers other than the manufacturers and wholesalers
above that specialize in lithium battery sales.
    PHMSA then identified air transportation businesses by NAICS code,
and found that there are 642 businesses with fewer than 1,000 employees
offering either scheduled air transportation (passenger or freight
only) or chartered freight transportation. Of these, 572 had 100 or
fewer employees and were judged to be unlikely to carry enough cargo
that the impact of the revised regulation would be considered
significant. Thus there are 70 air carriers potentially affected.
4. Description of the Projected Reporting, Record Keeping and Other
Compliance Requirements for Small Entities
    The costs accruing to small businesses are not anticipated to be
significant.
     Hazard communication: The adoption of the 2013-2014 ICAO
Technical Instructions for the majority of projected shipments is
unlikely to generate substantial new costs. The total estimated cost
for the entire industry over the next decade is between $1.5 and $2.1
million; the proportion applicable to small businesses is negligible.
     Training: PHMSA estimates that a company will spend
between $300 and $400 to train an employee once, with subsequent
trainings being required independent of this regulation. While this
figure represents the largest individual cost under consideration in
this analysis, the small businesses that commented on the Initial
Regulatory Flexibility Analysis (IRFA) state that they do currently
package fully regulated Class 9 shipments, indicating that these costs
are at least already partly borne by such businesses.
     Records of Design Testing: The final rule requires the
development and retention of battery-design testing results. The
projected cost of these activities is estimated at $110,000 over the
next 10 years; the proportion applicable to small businesses is
negligible.
5. Steps PHMSA Has Taken To Minimize the Significant Economic Impact on
Small Entities
    There are no alternatives to the final rule that would accomplish
the stated objectives of the rule, which are to reduce the risk posed
by the transport of lithium batteries and to harmonize the domestic HMR
with international rules. As discussed in IV. B. of the preamble to
this final rule, PHMSA considered a number of regulatory options: (1) A
do nothing option, (2) an option that would harmonize the HMR with the
requirements of the UN Model Regulations, the ICAO Technical
Instructions and the IMDG Code, and (3) an option consistent with
eliminating regulatory exceptions for the transport of small lithium
cells and batteries. PHMSA chose the second option because it was
constructed with the input of stakeholders representing the aviation,
manufacturing, and shipping industries, international governments, and
safety agencies. It is the result of compromise directed at producing a
strong yet flexible regulation and reflects congressional intent and
stakeholders' need for a global standard. Harmonizing the domestic HMR
with the requirements of the UN Model Regulations, the ICAO Technical
Instructions and the IMDG Code provides the most flexibility while
increasing safety levels. Based on this analysis, we certify that this
final rule does not impose a significant economic impact on a
substantial number of small entities.

F. Paperwork Reduction Act

    PHMSA currently has approved information collections under Office
of Management and Budget (OMB) Control Number 2137-0034, ``Hazardous
Materials Shipping Papers and Emergency Response Information'' which is
currently under OMB review and OMB Control Number 2137-0572, Testing
Requirements for Non-Bulk Packaging,'' with an expiration date of July
31, 2015. This final rule will result in an increase in the annual
burden of these information collections due to amendments being adopted
in this final rule. IATA states that, based on calculations for the
completion of a shipping paper for various types of shipments of
lithium batteries, it takes

between 3 minutes and 10 minutes to produce a shipping paper and
additional time associated with collection of data to complete the
information required on the written information to the pilot-in-command
(NOPIC) as required by Sec.  175.33 of the HMR. IATA also states that
PHMSA's estimate of consolidated shipments to be inaccurate. The
commenter states that while there is some level of package
consolidation for shipments of batteries and for equipment shipped with
batteries from the point of manufacture to a distribution center, the
same is not necessarily true for shipments from a distribution center.
    PHMSA has re-evaluated the additional time for a transport worker
to review and complete an existing shipping document; PHMSA's revised
estimate accounts for the reduced regulatory burden of this final rule
relative to the NPRM and the revised estimate also accounts for the
additional time required by shippers of batteries and assumes lithium
battery shippers often repeatedly offer the same hazardous materials
and have developed the ability to automate many administrative
processes. PHMSA has adjusted the paperwork burden imposed by the
requirements of this final rule accordingly.
    Under the Paperwork Reduction Act of 1995, no person is required to
respond to a collection of information unless it is approved by OMB and
displays a valid OMB control number. Section 1320.8(d), Title 5, Code
of Federal Regulations requires that PHMSA provide interested members
of the public and affected agencies an opportunity to comment on
information collection and recordkeeping requests.
    OMB Control No. 2137-0034
Hazardous Materials Shipping Papers and Emergency Response Information
    Additional Annual Number of Respondents: 670.
    Additional Annual Number of Responses: 143,430.
    Additional Annual Burden Hours: 2,390.
    Additional Annual Burden Costs: $47,800.
    OMB Control No. 2137-0572.
Testing Requirements for Non-Bulk Packaging
    Additional Annual Number of Respondents: 110.
    Additional Annual Number of Responses: 1,100.
    Additional Annual Burden Hours: 550.
    Additional Annual Burden Costs: $11,000.
    Requests for a copy of this information collection should be
directed to: Steven Andrews or T. Glenn Foster, Office of Hazardous
Materials Standards (PHH-10), Pipeline and Hazardous Materials Safety
Administration, Room E24-426, 1200 New Jersey Ave. SE., Washington, DC
20590-0001, telephone<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 generally publishes the Unified
Agenda in April and October of each year. The RIN contained in the
heading of this document can be used to cross-reference this action
with the Unified Agenda.

H. Unfunded Mandates Reform Act

    This final rule does not impose unfunded mandates under the
Unfunded Mandates Reform Act of 1995. It does not result in costs of
$140,800,000 or more, adjusted for inflation, to either State, local or
tribal governments, in the aggregate, or to the private sector in any
one year, and is the least burdensome alternative that achieves the
objective of the rule.

I. Environmental Assessment and Finding of No Significant Impact

    The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C.
4321-4347) requires Federal agencies to consider the environmental
impacts of major Federal actions and prepare a detailed statement for
actions significantly affecting the quality of the human environment.
For those actions that are unlikely to have significant environmental
impacts, the Council on Environmental Quality (CEQ) regulations (40 CFR
parts 1500-1508) require Federal agencies to conduct an environmental
assessment that includes (1) the need for the action, (2) alternatives
to the action, (3) probable environmental impacts of the action and
alternatives, and (4) the agencies and persons consulted during the
consideration process (40 CFR 1508.9).
1. Purpose and Need
    This final rule amends the requirements for the transport of
lithium batteries. Most of these amendments harmonize the HMR with its
international equivalents and focus on packaging, hazard communication
and training. These measures serve to ensure that lithium batteries are
safe for transport and the hazards associated with lithium batteries
are properly communicated. Thus, most of the amendments of this final
rule have no environmental impact. However, we are amending the
requirements applicable to the transport of transport of lithium
batteries for disposal or recycling. This section focuses on the
environmental impacts of these activities under each of the
alternatives considered.
    Once lithium batteries reach the end of their useful life they must
be recycled or properly disposed. The environmental benefits and policy
need for battery recycling have been demonstrated through the enactment
of battery recycling laws by more than half the states and Puerto Rico.
Several states have also enacted laws specifically mandating the
recycling of lithium ion batteries.\8\ Appropriate transport safety
regulations will ensure that lithium batteries can be safely and
efficiently transported for disposal or recycling. Any provisions for
the transport of lithium batteries must balance the need to facilitate
transport with the need to ensure that the hazards posed by lithium
batteries in transport are appropriately managed.
---------------------------------------------------------------------------

    \8\ Source: Call2Recycle, Inc a battery product stewardship
program; http://www.call2recycle.org/recycling-law-map/.
---------------------------------------------------------------------------

2. Alternatives
    In developing this rule, PHMSA considered three regulatory options:
(1) A do nothing option (no action alternative); (2) an option that
would expand the current recycling and disposal provisions thus
facilitating more movement; and (3) an option that eliminates
regulatory exceptions for the transport of small lithium cells and
batteries. This would require lithium batteries shipped for disposal or
recycling to meet all of the requirements applicable to new batteries.
    The second option is the selected alternative. PHMSA has chosen
this alternative because it was constructed with the input of
stakeholders representing the, manufacturing, and shipping industries,
environmental concerns and battery recyclers. This option requires
lithium batteries to be packaged to reduce the possibility of damage
that could lead to an incident; and accompanied by hazard information
that ensures appropriate and careful handling and informs transport
workers and emergency response personnel of actions to be taken in an
emergency.
    The do nothing option does not achieve the stated objective of
ensuring the safe transport of lithium batteries for disposal or
recycling.
    The third option was judged too costly and onerous to industry
relative

to potential benefits, and was thus eliminated.
3. Analysis of Environmental Impacts
    Hazardous materials are substances that may pose a threat to public
safety or the environment during transportation because of their
physical, chemical, or nuclear properties. The hazardous material
regulatory system is a risk management system that is prevention-
oriented and focused on identifying a safety hazard and reducing the
probability and quantity of a hazardous material release. The
regulations require each shipper to classify a material in accordance
with these hazard classes; the process of classifying a hazardous
material is itself a form of hazard analysis. Further, the regulations
require the shipper to communicate the material's hazards through use
of the hazard class, and proper shipping name on the shipping paper and
the use of labels on packages and placards on transport vehicles. Thus,
the shipping paper, labels, and placards communicate the most
significant findings of the shipper's hazard analysis. Hazardous
materials are often further sub-categorized to one of three packing
groups based upon its degree of hazard--from high-hazard Packing Group
I to a low-hazard Packing Group III material. The quality, damage
resistance, and performance standards of the packaging in each packing
group are appropriate for the hazards of the material transported.
    Releases of hazardous materials, whether caused by accident or
deliberate sabotage, can result in explosions or fires. Radioactive,
toxic, infectious, or corrosive hazardous materials can have short-term
or long-term exposure effects on humans or the environment. Generally,
however, the hazard class definitions are focused on the potential
safety hazards associated with a given material, or type of material,
rather than the environmental hazards of such materials.
    Lithium is the lightest solid metal. It can be absorbed into the
body by inhalation of its aerosol and by ingestion and is corrosive to
the eyes, the skin, and the respiratory tract. Lithium reacts violently
with strong oxidants, acids, and many compounds (hydrocarbons,
halogens, halons, concrete, sand and asbestos) causing a fire and
explosion hazard. In addition, lithium reacts with water, forming
highly flammable hydrogen gas and corrosive fumes of lithium hydroxide.
Lithium hydroxide represents a potentially significant environmental
hazard, particularly to water organisms. Lithium metal batteries
contain no toxic metals.
    Lithium ion batteries contain an ionic form of lithium but no
lithium metal. Lithium ion batteries do not pose an environmental
hazard and are safe for disposal in the normal municipal waste stream.
While other types of batteries include toxic metals such as cadmium,
the metals in lithium ion batteries--cobalt, copper, nickel and iron
are considered safe for landfills or incinerators. The primary hazard
posed by lithium batteries are their ability to overheat and ignite,
and once ignited, the resulting fires can be especially difficult to
extinguish. The likelihood to overheat or ignite is increased if the
batteries are poorly packaged, damaged or exposed to a fire or a heat
source. When packaged and handled properly, lithium batteries pose no
environmental hazard.
    While the HMR contain provisions applicable to the transport of
lithium batteries for disposal or recycling several commenters
expressed concern about a do nothing option. GRC stated that the
current provisions do not exclude the responsibility for hazardous
materials training for their suppliers and that training in accordance
with part 172, subpart H would be virtually impossible, given the
nature of their participating organizations and the number of
collection sites that include non-profits, schools, retailers,
community groups, and businesses. CEA contended that a do nothing
option will ultimately act as a disincentive for consumers to recycle
responsibly. PHMSA agrees with CEA's comment that the do nothing
alternative would reduce battery recycling compared with the preferred
alternative.
    We also considered an option that would impose additional safety
requirements on the transport of lithium batteries for disposal or
recycling, including a requirement that such batteries be placed in
specification packages. We considered this option because lithium
batteries of all sizes can be transported for disposal or recycling and
the batteries are often from an uncertain origin, may be damaged and
there is no guarantee that the batteries have a low energy level.
Enhanced safety requirements may be appropriate in some cases. This
option was ultimately rejected because this would not facilitate
battery recycling and would generate only marginal additional safety
benefits and potentially result in additional environmental impacts
from the use of additional packaging.
    RBRC stated that, for this rule to be successful there must be a
specific provision dealing with collection for recycling programs that
recognizes the simple fact that most used batteries collected are, by
their very nature, in a low state of charge. With this in mind, we
developed measures to expand the current lithium battery recycling
provisions with the aim to facilitate the transport of most lithium
batteries i.e. those used in consumer electronic devices consistent
with current exceptions for the transport of small lithium cells and
batteries. PHMSA ultimately selected this option because it was
determined to pose little adverse impact to the environment, encourages
responsible end of life practices for lithium batteries and provides a
means to safely transport lithium batteries for their final
disposition. The measures in this option reduce the risks to people and
the environment posed during transportation of lithium metal and
lithium ion batteries by ensuring that the batteries: Withstand
conditions normally encountered in transportation, are packaged to
reduce the possibility of damage that could lead to an incident, and
minimize the consequences of an incident. Additionally, the provisions
of this option facilitate the collection and safe transport of used
lithium cells and batteries for recycling or disposal.
4. Consultation and Public Comment
    PHSMA received numerous comments to the NPRM (75 FR 1302, Jan. 11,
2010) and the April 11, 2012 (77 FR 21714) Federal Register notice that
sought further comments on the impacts of revisions to the HMR
applicable to lithium batteries. The commenters who responded to the
draft environmental impact statement included Black and Decker, the
Environmental Technology Council, UTC, CERC, ITI, PRBA, the Lithium
Battery Industry Coalition, GRC, and CEA. These commenters supported
provisions for the transport of lithium batteries for recycling. They
stressed the need to maintain exceptions for the transport of small
(consumer type) lithium batteries. ITI stated that the initial
environmental impact statement published in the NPRM lacks an analysis
of the impact that classifying consumer electronic equipment as a Class
9 hazardous material would have on waste streams. The commenter stated
that such classification would result in significant escalation in the
cost of shipping devices containing lithium batteries for proper
disposal or recycling. The provisions of this final rule maintain the
current exceptions for the transport lithium batteries contained in
equipment; thus this final rule will not impact consumer electronic
equipment. The Environmental

Technology Council agreed that, while the performance standard may be
sufficient for lithium ion batteries, such as those found in cellular
phones and notebook computers, this standard may not be appropriate for
reactive batteries that pose the greatest risk. The commenter
recommended specific measures that should be taken to ensure the safe
transport of reactive batteries, including ensuring that batteries are
not connected in series, insulating all batteries from each other, and
limiting the types and sizes of packagings. The HMR require that
lithium batteries be protected from short circuits and damage, as well
as separated from each other and other conductive materials. We
encourage all shippers and carriers to implement appropriate risk
reduction measures commensurate with the hazard posed by an individual
shipment. These measures outlined in the HMR are intended to provide
flexible, performance-oriented provisions.
5. Finding of No Significant Impact
    PHMSA finds that the selected alternative will not have a
significant impact on the human environment. Lithium batteries are a
key part of strategies to develop greener technologies to power many
different applications from automobiles to cellular phones to
computers. The measures outlined in this final rule facilitate the safe
and efficient transportation of lithium metal and lithium ion batteries
across national boundaries from initial manufacture until their
eventual disposal or recycling. This regulation is anticipated to
result in slight positive impacts on the environment because the
regulation provides clear and consistent regulations that reduce the
likelihood of a transportation incident involving lithium batteries
which would likely cause other secondary environmental impacts. The
provisions of this final rule also continue to permit the operation of
battery recycling programs throughout the United States.

J. Privacy Act

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its rulemaking process. DOT posts these
comments, without edit, to www.regulations.gov, as described in the
system of records notice (DOT/ALL-14 FDMS), which can be reviewed at
www.dot.gov/privacy. DOT will read and respond to all substantive
comments on a rulemaking. If you are filing comments on behalf of an
organization or group of individuals, we encourage you to include the
name of your group or organization. However, all comments, even
anonymous comments filed on behalf of a group, will be considered if
they are timely filed. Including your name/group along with your
comment is completely optional.

K. Executive Order 13609 and International Trade Analysis

    Under E.O. 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.
    The Republic of Korea Ministry of Foreign Affairs and Trade, PRBA,
NEMA, NAM, Digital Europe, Japan, and the European Union stated that
the January 2010 NPRM is inconsistent with the ICAO Technical
Instructions. The commenters stated that the proposed elimination of
the exceptions for certain lithium batteries when transported by
aircraft, and the proposed revision of the design change criteria,
would result in an unnecessary increase in transportation, packing, and
testing costs for the manufacturers and traders of lithium batteries.
These commenters further stated that technical rules and regulations
should not be more trade-restrictive than necessary, as stipulated in
the relevant World Trade Organization Agreements addressing Technical
Barriers to Trade.
    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 this final rule to ensure that it does not
cause unnecessary obstacles to foreign trade. This final rule
harmonizes the domestic HMR with approaches outlined in the UN Model
Regulations, the ICAO Technical Instructions and the IMDG Code.
Commenters identified several benefits to adopting the international
transport standards for lithium batteries into the domestic
regulations, including streamlined shipping practices that reduce cost,
a reduction in the potential for confusion and improved shipment safety
through increased visibility of lithium battery shipments. Conversely,
commenters noted several disadvantages to not adopting the
international transport standards into the domestic regulations. The
current ICAO Technical Instructions are at least as safety as the
current HMR and many commenters stated that the current domestic
regulations do not provide the level of safety as the ICAO Technical
Instructions. Further, maintaining a dual system hinders consistent
enforcement of the requirements and increases the likelihood of
frustrated shipments.
    The decision to adopt the requirements of the ICAO Technical
Instructions into the domestic HMR was guided by the input of
stakeholders representing the aviation, manufacturing, and shipping
industries, as well as international governments and safety agencies.
It is the result of considerations directed at producing a strong yet
flexible regulation and reflects Congressional intent and stakeholders'
need for a global standard. Accordingly, this rulemaking is consistent
with E.O. 13609 and PHMSA's obligations under the Trade Agreement Act,
as amended.

List of Subjects

49 CFR Part 171

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

49 CFR Part 172

    Education, Hazardous materials transportation, Hazardous waste,
Incorporation by reference, Labeling, Markings, Packaging and
containers, Reporting and recordkeeping requirements.

49 CFR Part 173

    Hazardous materials transportation, Incorporation by reference,
Packaging and containers, Radioactive materials, Reporting and
recordkeeping requirements, Uranium.

49 CFR Part 175

    Air carriers, Hazardous materials transportation, Radioactive
materials, Reporting and recordkeeping requirements.

    In consideration of the foregoing, we amend 49 CFR Chapter I as
follows:

PART 171--GENERAL INFORMATION, REGULATIONS, AND DEFINITIONS

0
1. The authority citation for part 171 continues to read as follows:

    Authority:  49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.97; Pub.
L. 101-410 section 4 (28 U.S.C. 2641 note); Pub. L. 104-134, section
31001.

0
2. In Sec.  171.8:
0
a. The definitions for ``Aggregate lithium content'' and ``Equivalent
lithium content'' and ``Lithium content'' are removed.
0
b. The definitions for ``Lithium ion cell or battery'' ``Lithium metal
cell or battery'', ``Short circuit'' and ``Watt-hour'' are added in
alphabetical order.
    The additions read as follows:

Sec.  171.8  Definitions and abbreviations.

* * * * *
    Lithium ion cell or battery means a rechargeable electrochemical
cell or battery in which the positive and negative electrodes are both
lithium compounds constructed with no metallic lithium in either
electrode. A lithium ion polymer cell or battery that uses lithium ion
chemistries, as described herein, is regulated as a lithium ion cell or
battery.
    Lithium metal cell or battery means an electrochemical cell or
battery utilizing lithium metal or lithium alloys as the anode. The
lithium content of a lithium metal or lithium alloy cell or battery is
measured when the cell or battery is in an undischarged state. The
lithium content of a lithium metal or lithium alloy battery is the sum
of the grams of lithium content contained in the component cells of the
battery.
* * * * *
    Short circuit means a direct connection between positive and
negative terminals of a cell or battery that provides an abnormally low
resistance path for current flow.
* * * * *
    Watt-hour (Wh) means a unit of energy equivalent to one watt (1 W)
of work acting for one hour (1 h) of time. The Watt-hour rating of a
lithium ion cell or battery is determined by multiplying the rated
capacity of a cell or battery in ampere-hours, by its nominal voltage.
Therefore, Watt-hour (Wh) = ampere-hour (Ah) x volts (V).
* * * * *

0
3. In Sec.  171.12, paragraph (a)(6) is revised to read as follows:

Sec.  171.12  North American shipments.

    (a) * * *
    (6) Lithium metal cells and batteries. Lithium metal cells and
batteries (UN3090) are forbidden for transport aboard passenger-
carrying aircraft. The outside of each package that contains lithium
cells or batteries meeting the conditions for exception in Sec.
173.185(c) of this subchapter and transported in accordance with the
Transport Canada TDG Regulations must be marked in accordance with
Sec.  173.185(c)(1)(iii) or (c)(1)(iv) as appropriate.
* * * * *

0
4. In Sec.  171.24, paragraphs (d)(1)(ii) and (d)(1)(iii) are revised
to read as follows:

Sec.  171.24  Additional requirements for the use of the ICAO Technical
Instructions.

* * * * *
    (d) * * *
    (1) * * *
    (ii) Lithium metal cells and batteries. Lithium metal cells and
batteries (UN3090) are forbidden for transport aboard passenger-
carrying aircraft. The outside of each package that contains lithium
metal cells or lithium metal batteries (UN3090) transported in
accordance with Packing Instruction 968, Section II of the ICAO
Technical Instructions must be marked ``PRIMARY LITHIUM BATTERIES--
FORBIDDEN FOR TRANSPORT ABOARD PASSENGER AIRCRAFT'' or ``LITHIUM METAL
BATTERIES--FORBIDDEN FOR TRANSPORT ABOARD PASSENGER AIRCRAFT.''
    (iii) Low production runs or prototypes lithium cells or batteries.
Production runs consisting of not more than 100 lithium cells or
batteries per year, or prototype lithium cells or batteries (including
cells or batteries packed with, or contained in, equipment or motor
vehicles) not of a type proven to meet the requirements of section 38.3
of the UN Manual of Tests and Criteria (IBR, see Sec.  171.7 of this
subchapter), must be approved by the Associate Administrator prior to
transportation aboard aircraft.
* * * * *

0
5. In Sec.  171.25, paragraph (b)(3) is revised to read as follows:

Sec.  171.25  Additional requirements for the use of the IMDG Code.

* * * * *
    (b) * * *
    (3) The outside of each package containing lithium metal cells or
batteries (UN3090) transported in accordance with special provision 188
of the IMDG Code must be marked ``PRIMARY LITHIUM BATTERIES--FORBIDDEN
FOR TRANSPORT ABOARD PASSENGER AIRCRAFT'' or ``LITHIUM METAL
BATTERIES--FORBIDDEN FOR TRANSPORT ABOARD PASSENGER AIRCRAFT.'' This
marking is not required on packages that contain 5 kg (11 pounds) net
weight or less of lithium metal cells or batteries that are packed
with, or contained in, equipment.
* * * * *

PART 172--HAZARDOUS MATERIALS TABLE, SPECIAL PROVISIONS, HAZARDOUS
MATERIALS COMMUNICATIONS, EMERGENCY RESPONSE INFORMATION, TRAINING
REQUIREMENTS, AND SECURITY PLANS

0
6. The authority citation for part 172 continues to read as follows:

    Authority:  49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.97.

0
7. In Sec.  172.101, the Hazardous Materials Table is amended by
removing and adding entries in alphabetical order, to read as follows:

Sec.  172.101  Purpose and use of hazardous materials table.

* * * * *

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                (8)  Paging  (Sec.   173.***)       (9) Quantity limitations       (10) Vessel stowage
                 Hazardous                                                                        ---------------------------------------  (see Sec.  Sec.   173.27  ---------------------------
                 materials       Hazard                                                                                and 175.75)
  Symbols    descriptions and   class or    Identification      PG         Label       Special                                           ----------------------------
              proper shipping   division         Nos.                      codes      provisions   Exceptions   Non-bulk        Bulk        Passenger                  Loca- tion       Other
                   names                                                                                aircraft/    Cargo air-
                                                                                rail       craft only
(1)          (2).............         (3)  (4)............         (5)         (6)  (7)..........        (8A)        (8B)  (8C).........  (9A)........  (9B)........  (10A).......  (10B)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
             [REMOVE]

                                                                                * * * * * * *
             Lithium                    9  UN3091.........          II           9  29, 188, 189,         185         185  None.........  See A101,...  35 kg.......  A
              batteries,                                                             190, A54,                                            A104........
              contained in                                                           A55, A101,
              equipment.                                                             A104.
             Lithium                    9  UN3091.........          II           9  29, 188, 189,         185         185  None.........  See A101,     35 kg gross.  A
              batteries                                                              190, A54,                                             A103.
              packed with                                                            A55, A101,
              equipment.                                                             A103.
             Lithium battery.           9  UN3090.........          II           9  29, 188,              185         185  None.........  See A100....  35 kg gross.  A
                                                                                189,190,
                                                                                A51, A54,
                                                                                A55, A100.

                                                                                * * * * * * *
             [ADD]

                                                                                * * * * * * *
             Lithium ion                9  UN3480.........          II           9  A51, A54.....         185         185  185..........  5 kg........  35 kg.......  A
              batteries
              including
              lithium ion
              polymer
              batteries.
             Lithium ion                9  UN3481.........          II           9  A54..........         185         185  185..........  5 kg........  35 kg.......  A
              batteries
              contained in
              equipment
              including
              lithium ion
              polymer
              batteries.
             Lithium ion                9  UN3481.........          II           9  A54..........         185         185  185..........  5 kg........  35 kg.......  A
              batteries
              packed with
              equipment
              including
              lithium ion
              polymer
              batteries.
             Lithium metal              9  UN3090.........          II           9  A54..........         185         185  185..........  Forbidden...  35 kg.......  A
              batteries
              including
              lithium alloy
              batteries.
             Lithium metal              9  UN3091.........          II           9  A54, A101....         185         185  185..........  5 kg........  35 kg.......  A
              batteries
              contained in
              equipment
              including
              lithium alloy
              batteries.
             Lithium metal              9  UN3091.........          II           9  A54..........         185         185  185..........  5 kg........  35 kg.......  A
              batteries
              packed with
              equipment
              including
              lithium alloy
              batteries.

                                                                                * * * * * * *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

0
8. In Sec.  172.102 amend paragraphs (c)(1) and (c)(2) as follows:
0
a. In paragraph (c)(1), special provisions 134 and 328 are revised and
special provisions 29, 188, 189, and 190 are removed;
0
b. In paragraph (c)(2), special provisions A51, A54 and A101 are
revised; and special provisions A55, A100, A103, and A104 are removed.
    The revisions read as follows:

Sec.  172.102  Special provisions.

* * * * *
    (c) * * *
    (1) * * *
    134 This entry only applies to vehicles powered by wet batteries,
sodium batteries, lithium metal batteries or lithium ion batteries and
equipment powered by wet batteries or sodium batteries that are
transported with these batteries installed. For the purpose of this
special provision, vehicles are self-propelled apparatus designed to
carry one or more persons or goods. Examples of such vehicles are
electrically-powered cars, motorcycles, scooters, three- and four-
wheeled vehicles or motorcycles, battery-assisted bicycles, lawn
tractors, boats, aircraft, wheelchairs and other mobility aids.
Examples of equipment are lawnmowers, cleaning machines or model boats
and model aircraft. Equipment powered by lithium metal batteries or
lithium ion batteries must be consigned under the entries ``Lithium
metal batteries contained in equipment'' or ``Lithium metal batteries
packed with equipment'' or ``Lithium ion batteries contained in
equipment'' or ``Lithium ion batteries packed with equipment'' as
appropriate. Self-propelled vehicles or equipment that also contain an
internal combustion engine must be consigned under the entries
``Engine, internal combustion, flammable gas powered'' or ``Engine,
internal combustion, flammable liquid powered'' or ``Vehicle, flammable
gas powered'' or ``Vehicle, flammable liquid powered,'' as appropriate.
These entries include hybrid electric vehicles powered by both an
internal combustion engine and batteries. Additionally, self-propelled
vehicles or equipment that contain a fuel cell engine must be consigned
under the entries ``Engine, fuel cell, flammable gas powered'' or
``Engine, fuel cell, flammable liquid powered'' or ``Vehicle, fuel
cell, flammable gas powered'' or ``Vehicle, fuel cell, flammable liquid
powered,'' as appropriate. These entries include hybrid electric
vehicles powered by a fuel cell engine, an internal combustion engine,
and batteries.
* * * * *
    328 When lithium metal or lithium ion batteries are contained in
the fuel cell system, the item must be described under this entry and
the appropriate entries for ``Lithium metal batteries contained in
equipment'' or ``Lithium ion batteries contained in equipment''.
    (c) * * *
    (2) * * *
Code/Special Provisions
* * * * *
    A51 Irrespective of the quantity limitations specified in Column
(9A) of the Sec.  172.101 Table or Sec.  175.75(c), the following
aircraft batteries may be transported on passenger aircraft as cargo:
    a. Wet cell batteries, UN 2794 or UN 2795, up to a limit of 100kg
net mass per package;
    b. Lithium ion batteries, UN 3480, packages containing a single
aircraft battery with a net mass not exceeding 35kg; and
    c. Transport in accordance with this special provision must be
noted on the shipping paper.
* * * * *
    A54 Irrespective of the quantity limits in Column 9B of the Sec.
172.101 table, a lithium battery, including a lithium battery packed
with, or contained in, equipment that otherwise meets the applicable
requirements of Sec.  173.185, may have a mass exceeding 35 kg if
approved by the Associate Administrator prior to shipment.
* * * * *
    A101 In addition to the applicable requirements of Sec.  173.185,
the quantity of lithium metal in the batteries contained in any piece
of equipment must not exceed 12 g per cell and 500 g per battery.
* * * * *

PART 173--SHIPPERS--GENERAL REQUIREMENTS FOR SHIPMENTS AND
PACKAGINGS

0
9. The authority citation for part 173 continues to read as follows:

    Authority:  49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.97.

0
10. Section 173.185 is revised to read as follows:

Sec.  173.185  Lithium cells and batteries.

    As used in this section, lithium cell(s) or battery(ies) includes
both lithium metal and lithium ion chemistries. Equipment means the
device or apparatus for which the lithium cells or batteries will
provide electrical power for its operation.
    (a) Classification. (1) Each lithium cell or battery must be of the
type proven to meet the criteria in Part III, sub-section 38.3 of the
UN Manual of Tests and Criteria (IBR; see Sec.  171.7 of this
subchapter). Lithium cells and batteries are subject to these tests
regardless of whether the cells used to construct the battery are of a
tested type.
    (i) Cells and batteries manufactured according to a type meeting
the requirements of sub-section 38.3 of the UN Manual of Tests and
Criteria, Revision 3, Amendment 1 or any subsequent revision and
amendment applicable at the date of the type testing may continue to be
transported, unless otherwise provided in this subchapter.
    (ii) Cell and battery types only meeting the requirements of the UN
Manual of Tests and Criteria, Revision 3, are no longer valid. However,
cells and batteries manufactured in conformity with such types before
July 2003 may continue to be transported if all other applicable
requirements are fulfilled.
    (2) Each person who manufactures lithium cells or batteries must
create a record of satisfactory completion of the testing required by
this paragraph prior to offering the lithium cell or battery for
transport and must:
    (i) Maintain this record for as long as that design is offered for
transportation and for one year thereafter; and
    (ii) Make this record available to an authorized representative of
the Federal, state or local government upon request.
    (3) Except for cells or batteries meeting the requirements of
paragraph (c) of this section, each lithium cell or battery must:
    (i) Incorporate a safety venting device or be designed to preclude
a violent rupture under conditions normally incident to transport;
    (ii) Be equipped with effective means of preventing external short
circuits; and
    (iii) Be equipped with an effective means of preventing dangerous
reverse current flow (e.g., diodes or fuses) if a battery contains
cells, or a series of cells that are connected in parallel.
    (b) Packaging. (1) Each package offered for transportation
containing lithium cells or batteries, including lithium cells or
batteries packed with, or contained in, equipment, must meet all
applicable requirements of subpart B of this part.
    (2) Lithium cells or batteries, including lithium cells or
batteries packed with, or contained in, equipment, must be packaged in
a manner to prevent:
    (i) Short circuits;
    (ii) Movement within the outer package; and

    (iii) Accidental activation of the equipment.
    (3) For packages containing lithium cells or batteries offered for
transportation:
    (i) The lithium cells or batteries must be placed in non-metallic
inner packagings that completely enclose the cells or batteries, and
separate the cells or batteries from contact with equipment, other
devices, or conductive materials (e.g., metal) in the packaging.
    (ii) The inner packagings containing lithium cells or batteries
must be placed in one of the following packagings meeting the
requirements of part 178, subparts L and M, of this subchapter at the
Packing Group II level:
    (A) Metal (4A, 4B, 4N), wooden (4C1, 4C2, 4D, 4F), fiberboard (4G),
or solid plastic (4H1, 4H2) box;
    (B) Metal (1A2, 1B2, 1N2), plywood (1D), fiber (1G), or plastic
(1H2) drum;
    (C) Metal (3A2, 3B2) or plastic (3H2) jerrican.
    (iii) When packed with equipment lithium cells or batteries must:
    (A) Be placed in inner packagings that completely enclose the cell
or battery, then placed in an outer packaging. The completed package
for the cells or batteries must meet the Packing Group II performance
requirements as specified in paragraph (b)(3)(ii) of this section; or
    (B) Be placed in inner packagings that completely enclose the cell
or battery, then placed with equipment in a package that meets the
Packing Group II performance requirements as specified in paragraph
(b)(3)(ii) of this section.
    (4) When lithium cells or batteries are contained in equipment:
    (i) The outer packaging must be constructed of suitable material of
adequate strength and design in relation to the capacity and intended
use of the packaging, unless the lithium cells or batteries are
afforded equivalent protection by the equipment in which they are
contained;
    (ii) Equipment must be secured against movement within the outer
packaging and be packed so as to prevent accidental operation during
transport; and
    (iii) Any spare lithium ion cells or batteries packed with the
equipment must be packaged in accordance with paragraph (b)(3) of this
section.
    (5) Lithium batteries that weigh 12 kg (26.5 pounds) or more and
have a strong, impact-resistant outer casing and assemblies of such
batteries, may be packed in strong outer packagings; in protective
enclosures (for example, in fully enclosed or wooden slatted crates);
or on pallets or other handling devices, instead of packages meeting
the UN performance packaging requirements in paragraphs (b)(3)(ii) and
(b)(4) of this section. Batteries or battery assemblies must be secured
to prevent inadvertent movement, and the terminals may not support the
weight of other superimposed elements. Batteries or battery assemblies
packaged in accordance with this paragraph are not permitted for
transportation by passenger-carrying aircraft, and may be transported
by cargo aircraft only if approved by the Associate Administrator.
    (c) Exceptions for smaller cells or batteries. A package containing
lithium cells or batteries, or lithium cells or batteries packed with,
or contained in, equipment, that meets the conditions of this
paragraph, is excepted from the requirements in subparts C through H of
part 172 of this subchapter and the UN performance packaging
requirements in paragraphs (b)(3)(ii) and (b)(4) of this section under
the following conditions and limitations.
    (1) Size limits:
    (i) The Watt-hour rating may not exceed 20 Wh for a lithium ion
cell or 100 Wh for a lithium ion battery. After December 31, 2015, each
lithium ion battery subject to this provision must be marked with the
Watt-hour rating on the outside case.
    (ii) The lithium content may not exceed 1 g for a lithium metal
cell or 2 g for a lithium metal battery.
    (iii) Except when lithium metal cells or batteries are packed with
or contained in equipment in quantities less than 5 kg net weight, the
outer package that contains lithium metal cells or batteries must be
marked: ``PRIMARY LITHIUM BATTERIES--FORBIDDEN FOR TRANSPORT ABOARD
PASSENGER AIRCRAFT'' or ``LITHIUM METAL BATTERIES--FORBIDDEN FOR
TRANSPORT ABOARD PASSENGER AIRCRAFT.''
    (iv) For transportation by highway or rail only, the lithium
content of the cell and battery may be increased to 5 g for a lithium
metal cell and 25 g for a lithium metal battery and 60 Wh for a lithium
ion cell or 300 Wh for a lithium ion battery provided the outer package
is marked: ``LITHIUM BATTERIES--FORBIDDEN FOR TRANSPORT ABOARD AIRCRAFT
AND VESSEL.''
    (v) The marking specified in paragraphs (c)(1)(ii) and (c)(1)(iii)
of this section must have a background of contrasting color, and the
letters in the marking must be:
    (A) At least 6 mm (0.25 inch) on packages having a gross weight of
30 kg (66 pounds) or less, except that smaller font may be used as
necessary when package dimensions so require.
    (B) At least 12 mm (0.5 inch) in height on packages having a gross
weight of more than 30 kg (66 pounds).
    (vi) Except when lithium cells or batteries are packed with, or
contained in, equipment, each package must not exceed 30 kg (66 pounds)
gross weight.
    (2) Packaging. Except when lithium cells or batteries are contained
in equipment, each package must be capable of withstanding a 1.2 meter
drop test, in any orientation, without damage to the cells or batteries
contained in the package, without shifting of the contents that would
allow battery-to-battery (or cell-to-cell) contact, and without release
of the contents of the package.
    (3) Hazard communication. Except for a package containing button
cell batteries installed in equipment (including circuit boards), or no
more than four lithium cells or two lithium batteries installed in the
equipment:
    (i) The outer package must be marked with:
    (A) An indication that the package contains ``lithium metal'' or
``lithium ion'' cells or batteries, as appropriate;
    (B) An indication that the package is to be handled with care and
that a flammable hazard exits if the package is damaged;
    (C) An indication that special procedures must be followed in the
event the package is damaged, to include inspection and repacking if
necessary;
    (D) A telephone number for additional information.
    (ii) Each shipment of one or more packages marked in accordance
with this paragraph must be accompanied by a document that includes the
following:
    (A) An indication that the package contains ``lithium metal'' or
``lithium ion'' cells or batteries, as appropriate;
    (B) An indication that the package is to be handled with care and
that a flammable hazard exits if the package is damaged;
    (C) An indication that special procedures must be followed in the
event the package is damaged, to include inspection and repacking if
necessary; and
    (D) A telephone number for additional information.
    (4) Air transportation. For transportation by aircraft, lithium
cells and batteries may not exceed the limits in the following table.
The limits on the maximum number of batteries and maximum net quantity
of batteries in the following table may not be combined in the same
package:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     Lithium metal       Lithium metal       Lithium metal                                                Lithium ion
                                     cells and/or        cells with a      batteries with a    Lithium ion cells   Lithium ion cells   batteries with a
                                   batteries with a     lithium content     lithium content    and/or batteries    with a Watt-hour    Watt-hour rating
            Contents                lithium content     more than 0.3 g     more than 0.3 g    with a Watt-hour    rating more than    more than 2.7 Wh
                                   not more than 0.3   but not more than   but not more than    rating not more     2.7 Wh but not     but not more than
                                           g                  1 g                 2 g             than 2.7 Wh       more than 20 Wh         100 Wh
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maximum number of cells/          No Limit..........  8 cells...........  2 batteries.......  No Limit..........  8 cells...........  2 batteries.
 batteries per package.
Maximum net quantity (mass) per   2.5 kg............  n/a...............  n/a...............  2.5 kg............  n/a...............  n/a.
 package.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (i) The outer package must be durably and legibly marked with the
following handling marking, which is durable, legible and displayed on
a background of contrasting color:
[GRAPHIC] [TIFF OMITTED] TR06AU14.000

    (A) The marking must be not less than 120 mm (4.7 inches) wide by
110 mm (4.3 inches) high except markings of 105 mm (4.1 inches) wide by
74 mm (2.9 inches) high may be used on a package containing lithium
batteries when the package is too small for the larger marking;
    (B) The symbols and letters must be black and the border must be
red;
    (C) The ``*'' must be replaced by ``lithium ion battery'' and/or
``Lithium metal battery'' as appropriate and the ``xxx-xxx-xxxx'' must
be replaced by a telephone number for additional information; and
    (D) When packages required to bear the handling marking are placed
in an overpack, the handling marking must either be clearly visible
through the overpack, or the handling marking must also be affixed on
the outside of the overpack, and the overpack must be marked with the
word ``Overpack''.
    (ii) Each shipment with packages required to bear the handling
marking must include an indication the shipment contains ``lithium ion
batteries'' or ``lithium metal batteries,'' as appropriate, and when an
air waybill is used, an indication on the air waybill of compliance
with this paragraph (c)(4) (or the applicable ICAO Packing
Instruction).
    (iii) For lithium batteries packed with, or contained in,
equipment, the number of batteries in each package is limited to the
minimum number required to power the piece of equipment, plus two
spares, and the total net quantity (mass) of the lithium cells or
batteries in the completed package must not exceed 5 kg.
    (iv) Each person who prepares a package for transport containing
lithium cells or batteries, including cells or batteries packed with,
or contained in, equipment in accordance with the conditions and
limitations in this paragraph, must receive adequate instruction on
these conditions and limitations, commensurate with their
responsibilities.
    (v) A package that exceeds the number or quantity (mass) limits in
the table shown in this paragraph (c)(4) is subject to all applicable
requirements of this subchapter, except that a package containing no
more than 2.5 kg lithium metal cells or 10 kg lithium ion cells or
batteries is not subject to:
    (A) The UN performance packaging requirements in paragraphs
(b)(3)(ii) of this section when the package displays both the lithium
battery handling marking and the Class 9 label; and
    (B) The shipping paper requirements of subpart C of part 172 when
the offeror provides the air carrier alternative written documentation
containing the name and address of the offeror and consignee, the UN
number, an indication of compliance with this paragraph (c)(4) applies
(or the applicable ICAO Packing Instruction), and the number of
packages and the gross mass of each package and notification is given
to the pilot-in-command in accordance with Sec.  175.33 of this
subchapter.
    (d) Lithium cells or batteries shipped for disposal or recycling. A
lithium cell or battery, including a lithium cell or battery contained
in equipment, that is transported by motor vehicle to a permitted
storage facility or disposal site, or for purposes of recycling, is

excepted from the testing and record keeping requirements of paragraph
(a) and the specification packaging requirements of paragraph (b)(3) of
this section, when packed in a strong outer packaging conforming to the
requirements of Sec. Sec.  173.24 and 173.24a. A lithium cell or
battery that meets the size, packaging, and hazard communication
conditions in paragraph (c)(1)-(3) of this section is excepted from
subparts C through H of part 172 of this subchapter.
    (e) Low production runs and prototypes. Low production runs (i.e.,
annual production runs consisting of not more than 100 lithium cells or
batteries), or prototype lithium cells or batteries transported for
purposes of testing, are excepted from the testing and record keeping
requirements of paragraph (a) of this section provided:
    (1) Except as provided in paragraph (e)(3) of this section, each
cell or battery is individually packed in a non-metallic inner
packaging, inside an outer packaging, and is surrounded by cushioning
material that is non-combustible and non-conductive;
    (2) The inner packages containing lithium cells or batteries are
packed in one of the following packagings that meet the requirements of
part 178, Subparts L and M at Packing Group I level.
    (i) Metal (4A, 4B, 4N), wooden (4C1, 4C2, 4D, 4F), or solid plastic
(4H2) box;
    (ii) Metal (1A2, 1B2, 1N2), plywood (1D), or plastic (1H2) drum.
    (3) Lithium batteries that weigh 12 kg (26.5 pounds) or more and
have a strong, impact-resistant outer casing or assemblies of such
batteries, may be packed in strong outer packagings, in protective
enclosures (for example, in fully enclosed or wooden slatted crates),
or on pallets or other handling devices, instead of packages meeting
the UN performance packaging requirements in paragraphs (b)(3)(ii) and
(b)(4) of this section. The battery or battery assembly must be secured
to prevent inadvertent movement, and the terminals may not support the
weight of other superimposed elements;
    (4) Irrespective of the limit specified in column (9B) of the Sec.
172.101 Hazardous Materials Table, the battery or battery assembly
prepared for transport in accordance with this paragraph may have a
mass exceeding 35 kg gross weight when transported by cargo aircraft;
and
    (5) Batteries or battery assemblies packaged in accordance with
this paragraph are not permitted for transportation by passenger-
carrying aircraft, and may be transported by cargo aircraft only if
approved by the Associate Administrator prior to transportation.
    (f) Damaged, defective, or recalled cells or batteries. Lithium
cells or batteries, that have been damaged or identified by the
manufacturer as being defective for safety reasons, that have the
potential of producing a dangerous evolution of heat, fire, or short
circuit (e.g. those being returned to the manufacturer for safety
reasons) may be transported by highway, rail or vessel only, and must
be packaged as follows:
    (1) Each cell or battery must be placed in individual, non-metallic
inner packaging that completely encloses the cell or battery;
    (2) The inner packaging must be surrounded by cushioning material
that is non-combustible, non-conductive, and absorbent; and
    (3) Each inner packaging must be individually placed in one of the
following packagings meeting the requirements of part 178, subparts L
and M, of this subchapter at the Packing Group I level:
    (i) Metal (4A, 4B, 4N), wooden (4C1, 4C2, 4D, 4F), or solid plastic
(4H2) box;
    (ii) Metal (1A2, 1B2, 1N2), plywood (1D), or plastic (1H2) drum;
and
    (4) The outer package must be marked with an indication that the
package contains a ``Damaged/defective lithium ion battery'' and/or
``Damaged/defective lithium metal battery'' as appropriate.
    (g) Approval. A lithium cell or battery that does not conform to
the provisions of this subchapter may be transported only under
conditions approved by the Associate Administrator.

0
11. In Sec.  173.219, paragraph (b)(3) is revised to read as follows:

Sec.  173.219  Life-saving appliances.

* * * * *
    (b) * * *
    (3) Electric storage batteries and lithium batteries (life-saving
appliances containing lithium batteries must be packed in accordance
with Sec.  173.185 and Special Provisions A54 and A101 as applicable.);
* * * * *

0
12. In Sec.  173.220, paragraphs (d) and (f)(1) are revised to read as
follows:

Sec.  173.220  Internal combustion engines, self-propelled vehicles,
mechanical equipment containing internal combustion engines, battery
powered equipment or machinery, fuel cell-powered equipment or
machinery.

* * * * *
    (d) Lithium batteries. Except as provided in Sec.  172.102, special
provision A101, of this subchapter, vehicles, engines, and machinery
powered by lithium metal batteries, that are transported with these
batteries installed, are forbidden aboard passenger-carrying aircraft.
Lithium batteries contained in vehicles, engines, or mechanical
equipment must be securely fastened in the battery holder of the
vehicle, engine, or mechanical equipment, and be protected in such a
manner as to prevent damage and short circuits (e.g., by the use of
non-conductive caps that cover the terminals entirely). Except for
vehicles transported by highway, rail, or vessel with prototype or low
production lithium batteries securely installed, each lithium battery
must be of a type that has successfully passed each test in the UN
Manual of Tests and Criteria, as specified in Sec.  173.185, unless
approved by the Associate Administrator.
* * * * *
    (f) Other hazardous materials. (1) Items containing hazardous
materials, such as fire extinguishers, compressed gas accumulators,
safety devices, and other hazardous materials that are integral
components of the motor vehicle, engine, or mechanical equipment, and
that are necessary for the operation of the vehicle, engine, or
mechanical equipment, or for the safety of its operator or passengers,
must be securely installed in the motor vehicle, engine, or mechanical
equipment. Such items are not otherwise subject to the requirements of
this subchapter. Equipment (other than vehicles, engines, or mechanical
equipment), such as consumer electronic devices containing lithium
batteries, must be described as ``Lithium metal batteries contained in
equipment'' or ``Lithium ion batteries contained in equipment,'' as
appropriate, and transported in accordance with Sec.  173.185 of this
subchapter, and applicable special provisions. Equipment (other than
vehicles, engines, or mechanical equipment), such as consumer
electronic devices containing fuel cells (fuel cell cartridges), must
be described as ``Fuel cell cartridges contained in equipment'' and
transported in accordance with Sec.  173.230 of this subchapter.
* * * * *

PART 175--CARRIAGE BY AIRCRAFT

0
13. The authority citation for part 175 continues to read as follows:

    Authority: 49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.97.

0
14. In Sec.  175.8, add a new paragraph (a)(4) to read as follows:

Sec.  175.8  Exceptions for operator equipment and items of
replacement.

    (a) * * *
    (4) Unless otherwise addressed by FAA regulation or policy (e.g.
Advisory Circular), hazardous materials used by the operator aboard the
aircraft, when approved by the Administrator of the Federal Aviation
Administration.
* * * * *

0
15. In Sec.  175.10, paragraph (a)(18) is revised to read as follows:

Sec.  175.10  Exceptions for passengers, crewmembers, and air
operators.

    (a) * * *
    (18) Except as provided in Sec.  173.21 of this subchapter,
portable electronic devices (e.g., watches, calculating machines,
cameras, cellular phones, laptop and notebook computers, camcorders,
medical devices etc.) containing dry cells or dry batteries (including
lithium cells or batteries) and spare dry cells or batteries for these
devices, when carried by passengers or crew members for personal use.
Portable electronic devices powered by lithium batteries may be carried
in either checked or carry-on baggage. Spare lithium batteries must be
carried in carry-on baggage only. Each installed or spare lithium
battery must be of a type proven to meet the requirements of each test
in the UN Manual of Tests and Criteria, Part III, Sub-section 38.3 and
each spare lithium battery must be individually protected so as to
prevent short circuits (e.g., by placement in original retail
packaging, by otherwise insulating terminals by taping over exposed
terminals, or placing each battery in a separate plastic bag or
protective pouch). In addition, each installed or spare lithium battery
must not exceed the following:
    (i) For a lithium metal battery, a lithium content of not more than
2 grams per battery; or
    (ii) For a lithium ion battery, the Watt-hour rating must not
exceed 100 Wh. With the approval of the operator, portable electronic
devices may contain lithium ion batteries exceeding 100 Wh, but not
exceeding 160 Wh and no more than two individually protected lithium
ion batteries each exceeding 100 Wh, but not exceeding 160 Wh, may be
carried per person as spare batteries in carry-on baggage.
* * * * *

0
16. In Sec.  175.30, add a new paragraph (a)(5) to read as follows:

Sec.  175.30  Inspecting shipments.

    (a) * * *
    (5) Described on alternative written documentation when authorized
in accordance with Sec.  173.185(c)(4)(v). See Sec.  175.33 for
alternative written documentation retention requirements.
* * * * *

0
17. In Sec.  175.33, add new paragraphs (a)(12) and (c)(5) to read as
follows:

Sec.  175.33  Shipping paper and notification of pilot-in-command.

    (a) * * *
    (12) For shipments of lithium cells or batteries (UN3090 or UN3480)
offered for transportation, or transported in accordance with Sec.
173.185(c)(4)(v) of this subchapter, only the UN Number, proper
shipping name, hazard class, and the total quantity at each specific
loading location and whether the package must be loaded on a cargo only
aircraft.
* * * * *
    (c) * * *
    (5) Retain a copy of the alternative written documentation when
provided in accordance with Sec.  173.185(c)(4)(v)(B) of this
subchapter or an electronic image thereof, or the information contained
therein for 90 days at the airport of departure or the operator's
principal place of business.
* * * * *

    Issued in Washington, DC, on July 29, 2014 under authority
delegated in 49 CFR part 1.97.
Cynthia L. Quarterman,
Administrator.
[FR Doc. 2014-18146 Filed 8-5-14; 8:45 am]
BILLING CODE 4910-60-P