[Federal Register Volume 80, Number 175 (Thursday, September 10, 2015)]
[Rules and Regulations]
[Pages 54418-54440]
[FR Doc No: 2015-22617]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 105, 107, and 171

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

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

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

ACTION: Final rule.

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SUMMARY: PHMSA is adopting regulations to include the standard
operating procedures (SOPs) and criteria used to evaluate applications
for special permits and approvals. This rulemaking addresses issues
identified in the Hazardous Materials Transportation Safety Improvement
Act of 2012 related to the Office of Hazardous Materials Safety's
Approvals and Permits Division. In addition, this rulemaking also
provides clarity regarding what conditions need to be satisfied to
promote special permit application completeness. An application that
contains the required information reduces processing delays by reducing
the number of applications rejected due to incompleteness. Through
public notice and comment, this final rule is required to establish
SOPs to support the administration of the special permit and approval
programs, and objective criteria to support the evaluation of special
permit and approval applications. These amendments do not change
previously established policies, to include but not limited to any
inspection activities subsequent to issuance, modification or renewal
of a special permit and approval.

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

FOR FURTHER INFORMATION CONTACT: Ryan Paquet or Donald Burger, Office
of Hazardous Materials Safety, Approvals and Permits Division, (202)
366-4511, Pipeline and Hazardous Materials Safety Administration
(PHMSA), 1200 New Jersey Avenue SE., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Table of Contents

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

I. Executive Summary

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

II. Background

    The HMR prescribe regulations for the transportation of hazardous
materials in commerce. PHMSA issues one type of variance from the HMR
in the form of a ``special permit.'' It also provides written consent
to perform a function that requires prior consent under the HMR in the
form of an ``approval.'' These variances are designed to accommodate
innovation, provide consent, and allow alternatives that meet existing
transportation safety standards and/or ensure hazardous materials
transportation safety. Federal hazardous materials (hazmat) law directs
the Department to determine if the actions specified in each
application for a special permit establish a level of safety that meets
or exceeds that already present in the HMR, or if not present in the
HMR, establish a level of safety that is consistent with the public's
interest. PHMSA, through the HMR, applies these same conditions to the
issuance of an approval. Due to the unique features that may exist in
each application, PHMSA issues special permits and approvals on a case-
by-case basis.
    The HMR currently define a special permit as ``a document issued by
the Associate Administrator, or other designated Department official,
under the authority of 49 U.S.C. 5117 permitting a person to perform a
function that is not otherwise permitted under subchapter A or C of
this chapter,'' ``or other regulations issued under 49 U.S.C. 5101 et
seq. (e.g., Federal Motor Carrier Safety routing requirements).'' (See
49 CFR 105.5, 107.1, and 171.8.) An approval is currently defined in
the HMR as ``written authorization . . . from the Associate
Administrator or other designated Department official, to perform a
function for which prior authorization by the Associate Administrator
is required under subchapter C of this chapter. . . .'' Applicants who
apply for a special permit must do so in conformance with the
requirements prescribed in Sec. Sec.  107.101 to 107.127 of the HMR.
Applicants who apply for an approval must do so in conformance with the
requirements prescribed in Sec. Sec.  107.401 to 107.404, and
Sec. Sec.  107.701 to 107.717 of the HMR.
    PHMSA amended the HMR in 1996 (61 FR 21084) to include as part of
the approval application review process a requirement to review each
applicant's fitness to perform the tasks requested in their
applications. PHMSA also issued and updated internal SOPs several times
over the past decade to support the process and issuance of special
permits and approvals that comply with the HMR. On February 29, 2012
(see Docket No. PHMSA-2011-0283), PHMSA held a public meeting to invite
public comment on these considerations. In July 2012, PHMSA established
a working group to examine ways to streamline the fitness review
process while maintaining an acceptable level of safety, to expand the
fitness review process to include special permit applicants, and to
define and determine the adequacy of criteria that should be used to
initiate fitness reviews. As a result of this working group's efforts,
PHMSA published a Notice of Proposed Rulemaking (NPRM) on August 12,
2014 (79 FR 47047) to invite public comment on its proposal to add
updated SOP and evaluation criteria to process special permit and
approval applications. Specifically, the NPRM proposed to revise
Sec. Sec.  105.5, 107.1, 107.113, 107.117, 107.709; add a new Appendix
A to 49 CFR part 107, entitled ``Standard Operating Procedures for
Special Permits and Approvals;'' and revise Sec.  171.8 to incorporate
administrative procedures for processing special permits and approval
applications. On September 12, 2014 (79 FR 54676), PHMSA published a
correction to the August 2014 NPRM to propose that special permit and
approval applications that undergo review by an Operating
Administration (OA) will complete this review before they undergo an
automated review. This proposed correction also clarified that an OA
review, depending on its completeness, may negate the need for the
automated review. We have summarized these proposed actions below.

Sec.  105.5

    In Sec.  105.5, we proposed to revise the definitions for
``approval'' and ``special permit'' to clarify that an approval and
special permit may be issued by the Associate Administrator, the
Associate Administrator's designee, or as otherwise prescribed in the
HMR.

Sec.  107.1

    In Sec.  107.1, we proposed to revise the definitions for
``approval'' and ``special permit'' to clarify that an approval and
special permit may be issued by the Associate Administrator, the
Associate Administrator's designee, or as otherwise prescribed in the
HMR. In addition, we proposed to add for clarity new definitions for
``applicant fitness,'' ``fit or fitness,'' ``fitness coordinator,'' and
``insufficient corrective action.''

Sec.  107.113

    In Sec.  107.113(a), we proposed that the Associate Administrator
will review all special permit applications in conformance with
standard operating procedures proposed in new 49 CFR part 107, Appendix
A.

Sec.  107.117

    In Sec.  107.117(e), we proposed that the Associate Administrator
will review all emergency special permit applications in conformance
with standard operating procedures proposed in new 49 CFR part 107,
Appendix A.

Sec.  107.709

    In Sec.  107.709(b), we proposed that the Associate Administrator
will review all approval applications in conformance with standard
operating procedures proposed in new 49 CFR part 107, Appendix A.

49 CFR Part 107, Appendix A

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

Sec.  171.8

    In Sec.  171.8, we proposed to revise the definitions for
``approval'' and ``special permit'' to clarify that an approval and
special permit may be issued by the Associate Administrator, the
Associate Administrator's designee, or as otherwise prescribed in the
HMR.
    As stated earlier, PHMSA published a correction notice on September
12, 2014. In this notice, PHMSA added language to the proposed
``Automated review'' and ``Safety profile review'' sections of the
proposed SOPs to clarify that special permit and approval applications
that undergo a safety profile review by an OA will complete this safety
profile review before they undergo an automated review, and that an OA
review, depending on its completeness, may negate the need for the
automated review, respectively.
    In response to the NPRM, PHMSA received comments from six entities.
These comments and PHMSA's responses are provided in the ``Comment
Discussion'' section of this final rule.

III. Comment Discussion

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

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                Name                          Docket No.                           Web site link
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American Trucking Associations.....  PHMSA-2012-0260-0007.......  http://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0007.
Chlorine Institute.................  PHMSA-2012-0260-0008.......  http://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0008.
Dangerous Goods Advisory Council...  PHMSA-2012-0260-0011.......  http://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0011.
Institute of Makers of Explosives..  PHMSA-2012-0260-0006.......  http://www.regulations.gov/#!documentDetail;D=PHMSA-2012-0260-0006.
Reusable Industrial Packaging        PHMSA-2012-0260-0009.......  http://www.regulations.gov/
 Association.                                                      #!documentDetail;D=PHMSA-2012-0260-0009.
Sporting Arms & Ammunition           PHMSA-2012-0260-0010.......  http://www.regulations.gov/
 Manufacturers' Institute.                                         #!documentDetail;D=PHMSA-2012-0260-0010.
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    In this section, we summarize and discuss the comments received.
You may access the NPRM, correction notice, comments, and other
documents associated with this rulemaking by visiting the Federal
eRulemaking Portal at http://www.regulations.gov, under Docket No.
PHMSA-2012-0260, and specific comments by visiting the Web site links
listed in the previous table.

A. American Trucking Associations

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

    In 2012, hazardous materials carriers had four percent fewer
crashes per truck tractor than traditional fleets. Fleets
transporting hazardous materials also had thirty-five percent fewer
inspections resulting in a driver being taken out of service, and
fourteen percent fewer inspections resulting in a vehicle being
taken out of service. Yet even accounting for the hazardous
materials fleets' superior safety performance, once a fleet reaches
a certain size it is almost impossible that it will not have
suffered an accident involving a death, injury, or property-damaging
tow away due simply to exposure and the laws of probability. These
carriers are almost guaranteed to fail the automated review process.
    These carriers likely will not pass during the proposed Section
3(b)(ii) safety profile review either. At this point, PHMSA proposes
that the fitness coordinator review ``the applicant's history of
prior violations, insufficient corrective actions, or evidence that
the applicant is at risk of being unable to comply with the terms of
an application for an existing special permit, approval, or the
HMR[s].'' PHMSA proposes that carriers' accidents caused merely by
``driver error'' can be dismissed at this point. However, a fitness
coordinator is unlikely to be able to review enough of a carrier's
accident data to make such a determination off-site. The fitness
coordinator will therefore likely recommend that the motor carrier
applying for a special permit move on to the final level of review:
An on-site inspection. During an on-site inspection, the inspector
will have access to the carrier[']s accident reports and any other
pertinent safety information and would be able to clear the carrier
for a special permit.
    In 2012, 3,702 fatal crashes involving large trucks were
reported to the Department of Transportation (DOT). DOT further
estimates

another 367,000 crashes involving large trucks that resulted in
injury or property damage only [occurred during this period]. In
2012, large trucks traveled an estimated 268,318,000,000 miles.
Thus, on average and based on DOT figures, a large truck is involved
in a traffic accident every 1.4 million miles.
    ATA has only presented the data concerning crashes. However,
PHMSA also proposes to remove those with two or more violations of
its placarding regulations from automatic review and approval
eligibility. In calendar year 2013, placarding violations were the
seventh most common hazardous materials violation cited. Inspectors
issued just under 2,300 violations in 2013. PHMSA proposes to check
roughly 10,000 placarding violations over a four year period. A
carrier--particularly a large one--might easily have two or more of
those 10,000 violations. ATA also questions why two placarding
violations should automatically send a carrier to secondary review
when the six more frequently cited violations--especially failing to
secure the package in the vehicle, damaged/deteriorated/obscured
placards, and failure to carry shipping papers at all--have no
similar effects on special permit or approval eligibility.
    Ultimately, a carrier in the scenario described above is likely
to receive approval for the special permit. Unfortunately, the
carrier must comply with multiple levels of increasingly intrusive
reviews in order to do so. Rather than require motor carriers to
submit themselves to such levels of observation, ATA suggests that
PHMSA implement a system that controls for both fleet size and for
fleet utilization. Such a system should also include realistic
violation levels for carriers of all sizes that are derived from
examining FMCSA [Federal Motor Carrier Safety Administration]-
provided data about violations during any given year.

    PHMSA agrees with the ATA that those who transport hazardous
materials frequently, including carriers with larger fleets, may be at
greater risk \1\ for involvement in transportation incidents due to
their increased opportunity to be exposed to occurrences that affect
safety in transportation (e.g., other vehicles, road conditions,
weather, vehicle integrity, driver health, driver experience, etc.).
PHMSA also agrees that a fitness assessment program which includes
incident data proven to be an indicator of safe performance will assist
with the process of performing a Section 3(b)(ii) safety profile
review. However, PHMSA notes that the issuance of special permits and
approvals is unique in that they authorize activities involving
hazardous materials not currently permitted under the HMR. To ensure
their safe performance, PHMSA must assess the safety of the tasks
requested and the ability of the person(s) making the request to
successfully perform these tasks. PHMSA assesses the safety of the
tasks requested by subjecting them to technical review by its
Engineering and Research Division and/or appropriate OA's, as
applicable. PHMSA assesses the ability of the person(s) to perform the
tasks requested successfully based on recommendations it receives from
its Field Services Support Division and OA's. These staff are most
closely linked to the acquisition and use of this data, from incident
reports submitted in conformance with Sec. Sec.  171.15 and 171.16 and
data that is developed and managed by the FMCSA and PHMSA's evaluation
and risk management teams. Identifying and evaluating appropriate
fitness screening criteria and available data is the center of PHMSA's
risk management strategy.
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    \1\ Web site: Federal Motor Carrier Safety Administration's
Large Truck and Bus Crash Facts--http://www.fmcsa.dot.gov/safety/data-and-statistics/large-truck-and-bus-crash-facts.
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    Further, while other databases exist within the DOT and the federal
government that contain additional hazmat transportation safety
information that may be useful in a safety profile review, PHMSA does
not have access to these databases at this time. In addition, the
databases PHMSA currently uses are either not configured to retrieve or
do not contain some of the information and normalizing controls the ATA
has requested be included in the safety profile review. Nonetheless,
PHMSA agrees with the ATA that these types of data collection changes
will improve Sec.  3(b)(ii) of 49 CFR part 107, Appendix A's safety
profile review results, and reduce the opportunity for frequent
shippers and carriers of hazardous materials from being adversely
affected during the safety profile review process. Therefore, in the
future PHMSA will continue to study what factors are proven indicators
of safe hazmat transportation performance for the purposes of a safety
profile review, and review its data systems, software programs, and
data collection to include those safety indicators that can reasonably
be obtained.
    PHMSA disagrees with the ATA's statement that a fitness coordinator
may not be able to review enough of a carrier's accident data
information to make an offsite fitness determination of that carrier.
In most instances before an on-site safety profile review is
considered, PHMSA's fitness coordinators will contact the applicant for
clarifying information. If the information the applicant provides is
sufficient to address the coordinators' concerns and/or questions, this
may eliminate the need for an on-site inspection.
    PHMSA disagrees with the ATA's statement that PHMSA proposes to
remove all carriers with two or more placarding violations from
automatic review and approval eligibility. Specifically, the NPRM
proposed to remove carriers from automated review and approval
eligibility if they have two or more placarding violations involving
materials with hazard classes listed in Table 1 of Sec.  172.504(e).
Historically, materials that meet the hazard classes listed in Table 1
of Sec.  172.504(e) pose significantly higher risks in transportation.
Thus, PHMSA believes additional scrutiny regarding transportation
violations involving these materials is justified. The ATA also
believes placarding violations involving Table 2 materials should not
automatically send a carrier to secondary review. As stated in the
revised SOPs, PHMSA will address placarding violations under FMCSA
fitness criteria by not considering placarding violations involving
Sec.  172.504 Table 2 materials.
    PHMSA also agrees with the ATA that a safety profile review should
put greater weight on serious and not minor violations. Citing the
violations listed on FMCSA's ``Roadside Inspections/Hazmat Violations''
Web page,\2\ the ATA believes the six violations that occur most
frequently are associated with more safety risks in transportation.
These violations, listed in descending order of frequency, are:
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    \2\ Federal Motor Carrier Safety Administration Analysis &
Information Division, ``Roadside Inspections, HazMat Violations''
(Web site: http://ai.fmcsa.dot.gov/SafetyProgram/spViolation.aspx?rpt=RDHV).

    1. Package not secured in vehicle;
    2. No copy of USDOT hazmat vehicle registration number;
    3. Placard damaged, deteriorated, or obscured;
    4. Shipping paper accessibility;
    5. No shipping papers (carrier); and
    6. Vehicle not placarded as required.

    Of these six, the ATA believes three--failing to secure the package
in the vehicle, damaged/deteriorated/obscured placards, and failure to
carry shipping papers--should take precedence over placarding
violations involving Sec.  172.504(e), Table 2 materials.
    PHMSA further agrees with the ATA that inspection violations should
be categorized in one of two triggers that also distinguish between
greater and lesser transportation risks. Therefore, as proposed in the
NPRM, PHMSA is reducing the number of levels that initiate, also called
``trigger,'' a safety profile review to remove enforcement case
referrals and incidents involving foreign cylinder manufacturers or

requalifiers, and revising the safety profile review triggers to
include incorrect package selection, leaking packages, failure to
secure package, damaged/deteriorated/obscured placards, failure to
carry shipping papers, not following closure instructions, and
blocking/bracing problems. PHMSA is also revising the violations that
trigger an on-site inspection to include marking, labeling, placarding,
and shipping paper violations. PHMSA will determine applicants as
having failed the safety profile review if they are found to have any
of the safety profile review violations described earlier in this
paragraph. PHMSA believes these changes will lead to safety profile
reviews that are more indicative of applicants that may cause
compromises in safety. Further, PHMSA is revising the text in 49 CFR
part 107, Appendix A, to remove language that states carriers with two
Sec.  172.504(e), Table 2, placarding violations, and applicants with
more than two safety profile review trigger violations or more than
five on-site inspection trigger violations that have occurred during
the four years prior to applying for a special permit or approval are
automatically subject to a secondary review. PHMSA made this revision
because it lacks the software capability to discern these incidents
during an automatic review.
Safety Performance Data
    The ATA also commented that the NPRM ``proposes that highway
carriers `will be screened in an automated manner based upon criteria
established by FMCSA . . . which consists of interstate carrier data,
several states' intrastate data, interstate vehicle registration data,
and may include operational data such as inspections and crashes.'
PHMSA proposes that FMCSA's Safety and Fitness Electronic Records
(SAFER) system or another system like SAFER, but chosen by FMCSA, will
be used.'' The ATA believes safety data is better reflected in a
company's inspection information and crash history. It also recommends
that PHMSA consult only the underlying data to the index scores if the
validity of the index scores cannot be verified. The ATA recommends
that PHMSA base its SOP fitness evaluation criteria on categories FMCSA
has determined are better indicators of a motor carrier's safe
performance. The ATA further states:

    FMCSA has developed a new safety measurement tool, known as
Compliance, Safety, Accountability (CSA). CSA utilizes the
inspection and crash data that PHMSA proposes should be considered
in making special permit determinations. The CSA system then
amalgamates that data and runs it through an algorithm in order to
generate seven index scores ranking motor carriers in relation to
other carriers of similar size or with a similar number of
inspections. But, PHMSA's special permit and approvals requirements
are based upon applicants showing that safety performance will be at
the same or a higher level than would prevail outside of the special
transportation provisions requested. Thus, CSA scores should only be
used if they can be shown to reliably represent individual carrier
safety performance.
    Many of the individual, discrete pieces of data utilized by the
CSA algorithm could be useful to PHMSA in making a determination
about a carrier. These pieces of information could be useful with
only an automated review or at the safety profile review by a DOT
official. However, multiple studies have shown that FMCSA's overall
aggregate indexing and scoring system does not accurately or
reliably represent an individual carrier's safety performance or
reliably predict future crash involvement. Essentially, the scores
are not good indicators as to whether or not a carrier ``is fit to
conduct the activity [that would be] authorized by the special
permit or approval application.''
    FMCSA even avoids using CSA scores in awarding Hazardous
Materials Safety Permits (Safety Permit). Safety Permits are
required for the transport of highway route-controlled quantities of
Class 7 hazardous materials, certain high explosives, poison
inhalation hazards in Zones A-D, and shipments of compressed or
liquefied natural gas. Rather than utilize CSA scores, FMCSA awards
safety permits based on a carrier's performance in avoiding crashes
and out of service orders during vehicle, driver, and hazardous
materials inspections.
    Wisely, FMCSA is unwilling to award Safety Permits based upon
CSA scores. In fact, several carriers that hold Safety Permits have
CSA Hazmat BASIC index scores well above the threshold for agency
intervention. Therefore, it is inappropriate for PHMSA to rely on
these same index scores eschewed by FMCSA in approving or denying
special permit or approval applications. PHMSA can and should rely
on inspection information and crash history. However, absent
verification that the index scores contain useful safety
information, only the underlying data should be consulted.

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

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

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

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

B. The Chlorine Institute

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

C. Dangerous Goods Advisory Council

General Comments
    The Dangerous Goods Advisory Council (DGAC) expressed its support
of PHMSA's efforts to comply with MAP-21 requirements to issue
regulations that establish SOPs and criteria to evaluate applications
for special permits and approvals, in addition to the publishing of the
SOPs. However, the DGAC also expressed concerns about several proposals
in the NPRM, and requested that PHMSA revise its SOPs to reduce
possible subjectivity and processing times.
PHMSA's Responses to Routine Requests
    The DGAC commented that the procedures PHMSA proposed for managing
special permit and approval applications do not provide for responding
to routine requests for administrative revisions, such as name changes,
address updates, or minor editorial revisions to correct non-
substantive errors. The DGAC believes requiring applicants to submit an
entire application to make such minor changes does not promote safety
and burdens PHMSA's and the applicant's administrative processes.
    PHMSA disagrees. When an applicant asks to modify an existing
special permit to make routine administrative changes, such as a change
of address and/or minor editorial revision to correct a non-substantive
error, paragraphs (c) and (d) of Sec.  107.105 require that the
applicant requesting this change submit an application to PHMSA that
describes and justifies their request and includes information relevant
to the proposal, which is a ``full'' application for this type of
request provided it complies with all applicable requirements of the
HMR. Since the special permit is already approved, depending on the
type of request, all the safety justification information required in
the initial application will not be needed. Relevant information to the
request is also what is needed to make routine administrative changes
to an existing approval, but the language in Sec.  107.705(b) is not as
clear. Therefore, PHMSA is revising the introductory paragraph of Sec.
107.705(c) to include language similar to that in Sec.  107.105(c) that
requires relevant information be submitted with the request. As a
result, PHMSA believes making requests for modifications through the
submission of a full application, as prescribed in the HMR, is not a
significant burden. In addition, providing a full application does
serve a safety benefit since it will require the application to be
screened through an automated fitness review that will identify any
possible changes to the company's fitness profile. Regarding requests
for name changes, additional information is needed since PHMSA
technically does not issue ``name changes'' to permits and approvals.
The applicant requesting a company name change must be able to
demonstrate that the new company is performing the activities
authorized under the special permit or approval in a manner that is
identical to that of the previous company. For example, the applicant
must provide a filing from the state of incorporation indicating that
the only change to the corporation is a change in the name, or other
documentation to indicate that although the company is changing, its
personnel, procedures and activities performed under the special permit
or approval will not change under the auspices of the new company. If
these conditions are met, then PHMSA grants an approval or permit to
the new company that it may maintain the same approval or permit number
as the one previously issued.
    Further, though PHMSA continuously strives to improve the
efficiency of its special permit and approval processing operations, it
is the applicant's responsibility to ensure his or her application is
correct and complete. PHMSA receives approximately 30,000 special
permit and approval applications annually. One of the most effective
ways to ensure efficient processing of an application is that it is
complete. Past attempts by PHMSA to delay processing incomplete
applications until it received the missing or corrected information
from

applicants resulted in significant application processing delays. If
applicants are permitted to submit incomplete applications without any
negative consequences, there is no incentive for applicants to submit
complete and conforming applications. Requiring applications to be
complete prior to processing will enhance PHMSA's ability to process
the applications in a timely manner. The time that would be utilized
gathering additional information and updating applications could be
used more effectively by processing complete applications. Further,
budgetary constraints prevent PHMSA from modifying its current
application processing software. Therefore, PHMSA will not create a
separate application process for managing routine administrative
application changes.
Assessment of Manufacturers That Do Not Ship
    DGAC stated that it is not clear about the intent of PHMSA's
request on how to assess hazardous materials manufacturers that do not
ship. Specifically, the DGAC states that it is not clear what PHMSA's
jurisdiction is to assess fitness for entities that do not offer
hazardous materials or packaging marked as acceptable for
transportation.
    PHMSA disagrees. While the DGAC correctly points out that the HMR
do not apply to a hazardous material that is not being transported in
commerce, the HMR apply to all actions that affect the safe transport
of hazardous materials in commerce, including those performed by
manufacturers that do not ship, such as hazard classification and
consignment through a freight forwarder or broker. Therefore, each
applicant for a special permit or approval must be assessed for its
fitness to perform actions relevant to compliance with the HMR. For
those manufacturers that do not perform a hazmat function, PHMSA does
not have regulatory jurisdiction over these entities. PHMSA believes
that clarifying the responsibilities under the HMR of manufacturers
that do not ship is beneficial to this process.
Necessity of Assessments of Applicants Performing Functions That
Require Registration
    The DGAC questioned the necessity for making fitness determinations
of applicants that perform certain functions requiring registration. As
an example, DGAC stated that persons desiring to use a symbol as their
company identifier must register with PHMSA and be issued a number.
DGAC stated that performing a fitness determination on these persons
seems to serve no useful purpose. For persons who perform only visual
inspections of cylinders that are required to register to receive a
Visual Identification Number (VIN), the DGAC expressed doubt that PHMSA
has an inspection history on the vast majority of these individuals,
and that PHMSA can perform an on-site inspection of all applicants for
VINs in a timely manner. The DGAC concluded by stating that withholding
the issuance of a VIN until an inspection can be performed may cause
severe hardship for such applicants, and affect their ability to stay
in business.
    PHMSA disagrees. While it is not our intent to inspect all VIN
applicants, and historically we have found low levels of risk with
visual cylinder requalifiers, visually inspecting cylinders is a safety
function under the HMR. Therefore, PHMSA will analyze VIN applicants
for fitness if PHMSA is aware of any intelligence that the applicant is
not capable of performing this activity. Further, the average
processing time for a VIN is 3 to 5 days or less. PHMSA has never had
delays in processing these applications. However, PHMSA is reviewing
how we process these applications to determine if we can implement more
automation.
Authority To Determine Sufficient Corrective Action
    The DGAC expressed concern regarding the authority the proposed
SOPs would give the PHMSA Field Operations (FOPS) officer or authorized
Operating Administration (OA) representative to make a subjective
determination that corrective action taken by an applicant in response
to a prior enforcement case is insufficient and that the basic safety
management controls proposed for the type of hazardous material,
packaging, procedures and/or mode of transport remain inadequate. DGAC
stated that such a determination by a single individual is purely
subjective without a determination that a violation continues to exist.
Further, DGAC believes that this type of determination lacks both the
administrative and legal review to verify existence of a violation, and
the administrative processes for a company to challenge such findings.
    PHMSA disagrees. Fitness is not determined by one FOPS Division
staff, or a representative of the Department, such as an OA
representative. An applicant that undergoes an initial safety profile
review and is flagged has his or her case first reviewed by a FOPS
officer, and then the case goes through a second level review. Further,
a company has 30 days to submit corrective actions after a FOPS officer
or OA investigator finds possible violations. If the first-line field
supervisor considers the corrective actions sufficient to address the
observed violation, the supervisor presumes that corrective actions
have been put into place and will prevent future recurrence. In some
instances, a follow up re-inspection is also executed to ensure the
corrective actions have adequately addressed the problem. All field
case reports, including corrective actions, are reviewed by PHMSA's
legal counsel and a final penalty is assessed. The penalty amount can
be challenged by the company under existing administrative processes.
Further, for additional clarity and in response to a request from
commenters, PHMSA has added a definition for ``sufficient corrective
action'' under Sec.  107.1.
Criteria Used To Determine if an Applicant is ``Fit'' or ``Unfit''
    DGAC states that it remains unclear as to what criteria will be
used to determine if an applicant is either ``fit'' or ``unfit.'' It
also states that even though minor violations of the HMR may be
uncovered during an on-site investigation, such violations may not have
a serious impact on the compliance posture of the applicant. The DGAC
recommends that PHMSA clearly articulate the conditions under which an
applicant would be determined to be ``unfit.''
    PHMSA has articulated these conditions to the extent possible in
this final rule. However, too many variables exist among those who
affect the safe transport of hazardous materials to state with
certainty what HMR violations or previous incident history will be
found and to what extent they will affect the status of an applicant's
fitness. For example, if a violation or series of previous incidents is
found and PHMSA determines the applicant has not implemented sufficient
corrective actions for prior violations, or that the applicant is at
risk of being unable to comply with the terms of an application for a
special permit or approval, an existing special permit or approval, or
the HMR, then PHMSA will determine that the applicant is unfit to
conduct the activities requested. Although FOPS officers and OA
representatives do not disclose their inspection process and their
inspections are unannounced, their inspections are conducted in a
logical sequence and involve all aspects of the applicants' operations
that are applicable to the HMR.

D. Institute of Makers of Explosives

General Comments
    The Institute of Makers of Explosives (IME) expressed concern that
the SOPs proposed in the NPRM introduce practices and procedures that
increase the costs and timelines of producing and managing special
permits and approvals applications without addressing the fundamental
problems the DOT Office of Inspector General (OIG) identified with
these PHMSA programs--deficiencies in how PHMSA manages its paperwork
and provides clarity when processing these applications. The IME stated
the DOT OIG directed PHMSA to clarify and publish its SOPs for special
permits and approvals in its 2009 report. The IME also stated the DOT
OIG cited as the reason for this directive PHMSA's deficiencies in
managing its paperwork, but not for the performance of tasks PHMSA
authorized in the special permits and approvals it has approved. The
IME further stated PHMSA responded to the OIG's request by issuing
``without public notice and comment, two documents describing new
complex procedural schemes that substantively altered the special
permit and approvals application and evaluation process, and
fundamentally changed the procedures the agency would follow in
conducting a fitness determination.''
    The IME further noted that although PHMSA identified its SOPs as
``a process for evaluating an applicant's fitness,'' it identified its
SOPs for approvals ``as a draft with a `to be determined''' placeholder
for its fitness determination standard. The IME stated that the agency
began using these SOPs to make regulatory determinations of fitness
although the regulated community had no idea what threshold level of
performance would be used to determine an applicant's ``fitness.'' The
IME stated the regulated community responded to this action ``with
letters and a petition for rulemaking requesting that PHMSA establish
its SOPs and fitness criteria by rulemaking.'' When PHMSA rejected
these requests, the IME stated, ``Congress intervened with a directive
that PHMSA issue regulations to establish SOPs for the SPAP [Special
Permit Application Process], and objective criteria to support the
evaluation of special permit and approval applications.''
    As stated earlier in this preamble, PHMSA continuously strives to
improve the efficiency of its special permit and approval processing
operations while processing approximately 30,000 special permit and
approval applications annually. In the past, delays in processing
incomplete applications until PHMSA received missing or corrected
information from applicants resulted in significant delays in
processing applications. As a result, PHMSA has ceased that practice.
PHMSA must also ensure that all special permit and approval requests
are not authorized until they are determined to be as safe as those
activities permitted under the HMR or are determined to be safe enough
to serve the public interest. In addition, by undertaking this
rulemaking process, PHMSA is responding to requests from the regulated
public to open the development of its special permit and approval SOPs
to full public disclosure and comment.
Concerns and Observations About the NPRM
    The IME indicated in its comments that it supports several proposed
amendments in the NPRM. These include a four-year review period, Table
1 applications, hazmat registration, party-to-applicant fitness, data
normalization and relevance, and presumption of fitness. However, the
IME provided several comments pertaining to a number of concerns and
observations. They are as discussed below.
Costs and Benefits
    In its comments, the IME stated that PHMSA's claim that costs and
benefits are unaffected due to this rulemaking is premature.
Specifically, it stated that ``every determination PHMSA makes of an
applicant's fitness or whether to issue or deny a special permit or
approval has an effect outside of the agency. Furthermore,
opportunities to affect those costs and benefits change when the
procedures and standards change. For several years, the regulated
community has relied on SOPs posted on PHMSA's Web page. Yet PHMSA
acknowledged, at some time after its 2012 public meeting on fitness
determination standards, that it has revised its SOPs. It may be that
the agency's claim that the SOPs and fitness criteria described in the
rulemaking are unlikely to change costs and benefits is because PHMSA
is describing its current practices, not the SOPs posted to its Web
site. Whatever the case, a declaration that costs and benefits are
unaffected is premature because it presupposes the outcome of this
rulemaking.''
    PHMSA notes that for several years, Congress and the DOT's
Inspector General (IG) have directed PHMSA to assess the ability (i.e.,
fitness) of special permit, and more recently approval, applicants to
ensure they can safely perform the tasks requested in their
applications. PHMSA developed and revised its SOPs as internal
administrative guidance to help its staff properly process these
applications, reduce delays, and accommodate changes to automated
systems, database availability, and DOT and PHMSA directives. PHMSA
also recognizes the financial impact special permits and approvals have
on industry processes. However, as mentioned earlier in this preamble,
the risks associated with hazardous materials and the potential for
severe consequences to the public and environment if they are
improperly transported require that PHMSA must not authorize permission
to transport these materials in a manner not permitted under the HMR
until PHMSA ensures that the actions requested and the persons
performing these actions are safe.
Streamlining the Process
    The IME also expressed its concern of how ``backlogged''
applications have plagued the SPAP since the events of 2009. It noted
that:

    PHMSA exercises new authority to incorporate proven special
permits into the HMR. Backlogs from this part of the SPAP may be
self-correcting. While IME appreciates the dedication of PHMSA staff
to move existing backlogged applications, the frequency with which
intervention is required to request action on these applications
suggests that the process needs to be better streamlined. PHMSA has
established a 120-day processing schedule before an application can
be deemed ``backlogged.'' We do not believe that every application
should be held to a 120-day processing schedule, and we associate
ourselves with those that believe the length of time PHMSA takes to
process and issue special permits or approvals, especially when
applications lag beyond the current 120-day processing threshold,
adversely impacts U.S. competitiveness. While nothing in this notice
indicates that the regulated community can expect a shorter
processing schedule, the agency does describe revised procedures
that suggest a shorter timeframe is possible. For example, PHMSA has
begun to concurrently process both the technical and the fitness
evaluations. Based on concurrent processing, PHMSA should establish
a shorter timeframe for applicants to gauge when they will be
provided a decision from the agency.
    In another streamlining initiative, PHMSA issued notice that it
was ceasing to perform fitness reviews for classification approvals.
These approvals are simply affirmations of compliance with
classification regulations. Those affected must have PHMSA-required
tests performed by PHMSA-approved laboratories. Denying a request
for such an approval on the basis of fitness is, in effect, denying
the applicant the opportunity to

properly classify a material in accordance with the applicable
regulations. While we support this policy initiative, PHMSA left
open the door for interpretive confusion with a concluding statement
that, ``[f]itness of applicants for classification approvals will
continue to be reviewed through application evaluation, inspection,
oversight and intelligence received from PHMSA or another Operating
Administration (FAA, FMCSA, FRA, or USCG).'' This statement appears
to contradict the announced policy that fitness determinations would
not be required for classification applications. PHMSA should
clarify its policy as part of this rulemaking.
    PHMSA states that there are four steps in the processing of an
application, whether for special permits or approvals. They include
a ``completeness'' phase, publication, ``evaluation'' phase (which
includes both a technical and a fitness evaluation), and
``disposition'' phase. The completeness phase is to determine if the
application contains all the information required by the HMR.
However, the preamble states that evaluation phase is used to
``determine if the application is complete.'' This duplication is
needless and will slow the processing of the application.
Additionally, it is not clear from the preamble discussion when
applicants will be notified that an application is rejected. Reasons
to reject applications, such as incompleteness, omissions, errors,
could be manifest at any stage of the processing phases. Whenever
PHMSA makes a determination to reject an application, the applicant
should be immediately notified. An application tagged to be rejected
should not continue to move along the processing queue only to be
rejected at some later date.
    PHMSA has stated that it queues applications on a ``first come,
first served'' basis. While we support this prioritization
principle, it does not recognize the fact that applications are
different and, once in the system, applications should be assigned
to separate tracks and staff who specialize in the processing of
application types. For example, it seems intuitive that
classification approvals with a 3-part review process without the
need for Federal Register publication or a fitness determination
would require less time to complete than special permit applications
with a 5-part process which includes Federal Register publication
and a fitness determination. PHMSA should accommodate these
distinctions with a shorter processing schedule.
    Likewise, IME has long advocated for a separate track to process
applications seeking minor corrections, such as name changes, or
those with minor errors, such as misspellings, or omissions.
However, PHMSA states that it has a ``new'' practice of rejecting
``incomplete'' applications. The agency states that ``problems with
recordkeeping'' require the resubmission of the entire application,
with corrections, in order for a rejected application to be
reconsidered. This is a costly, ineffective way for PHMSA to get
around problems it has with recordkeeping. The policy may make it
easy for PHMSA to clear its books, as all the costs of resubmittal,
including lost commercial opportunity costs, are borne by the
applicant. While we agree that incomplete applications and
applications containing non-substantive errors should be tabled
pending correction, we do not believe that these types of
administrative deficiencies warrant returning resubmitted
applications to the end of the queue and restarting the processing
time-frame anew. Rather, we suggest that PHMSA establish a dual-
track system, allowing applicants of incomplete applications or
those otherwise tagged to be rejected for non-substantive reasons a
grace period, such as 30 days, to correct the deficiency(ies)
identified in the application. If the applicant resubmits a
corrected application, the application should be returned to the
point in the queue where it was pulled. If the applicant fails to
resubmit requested information in the time allowed, the application
should be rejected and any resubmittal treated as a new application.
    In what could be seen as process streamlining, PHMSA states that
it ``will review companies with multiple locations as one
organization, placing an emphasis on its examination of the
company's locations where the requested actions and/or processes are
being performed.'' However, the announced policy seems
contradictory. A company with multiple locations is not being
reviewed as one organization if, at the same time, PHMSA is
examining locations where the safety permit or approval is to be
carried out. If PHMSA means some type of middle ground, it should
clarify how many ``locations'' within a company will be visited and
how the locations will be selected.
    It is important that PHMSA look for opportunities to streamline
its 120-day special permit and approval processes. In each of the
last four fiscal years, PHMSA has requested Congress to authorize
millions in user fees to pay for the costs to administer the SPAP.
SPAP users have resisted efforts to impose these fees for many
reasons. One key reason is that PHMSA has done nothing to restrain
its own costs within the program. Meanwhile, we are grateful that
Congress has rejected these budget requests.

    While PHMSA requests that applicants submit their special permit
and approval applications 120 days before they would like them to be
issued, PHMSA is not restricted by this timeline. Typically, it takes
PHMSA less than 180 days to process a special permit application,
approximately 45 days to process an approval classification, and
approximately 5-6 days to process a VIN application provided all are
correct and complete. While PHMSA agrees that the application process
should be streamlined to the extent possible, PHMSA must take what time
is needed to efficiently and effectively determine that the actions
requested in each application are safe and what modifications, if any,
may be needed to make the requested actions safe. PHMSA believes that
it must consider applications as they are received to be fair to those
applicants who have prepared their applications correctly. PHMSA
disagrees with the IME and other commenters that establishing grace
periods for applications with missing information will improve its
ability to streamline its application process. Past efforts to create
internal systems that did this significantly delayed PHMSA's ability to
process applications efficiently. Further, budgetary constraints
prevent PHMSA from modifying its current application processing
software to create a separate application process for managing routine
administrative application changes.
    Over the past 10 years, approximately 10 percent of PHMSA's special
permit applications have been in processing for greater than 180 days.
PHMSA must report applications that are not processed within 180 days
in the Federal Register. PHMSA agrees that whenever an application
fails any stage in the process, this failure should trigger immediate
notification to the applicant to avoid excessive delays. To improve the
transparency of this process, PHMSA has developed and is testing an
online process for submitting and checking on the status of special
permit and approval applications. This online system is being designed
to notify applicants when their applications have failed to meet the
required criteria. Once the testing is completed and the software is
performing correctly, PHMSA will make this online information available
to the general public. This online method should also improve times for
issuing ``M'' and ``VIN'' numbers, and renewals.
    PHMSA disagrees with the request to reduce processing times by no
longer publishing notifications of applications received in the Federal
Register. PHMSA is required by law to provide public notification in
the Federal Register of its receipt of special permit applications only
(see Sec. Sec.  107.113(b) and (j), and 107.117(g)).
    Regarding screening applicants with multiple locations as one
entity, PHMSA agrees. PHMSA already performs its initial screening of
these applicants as one entity; however, follow-up reviews are more
site-specific, based on the number of locations and resource
availability.
    PHMSA also agrees with the IME that the language explaining the
difference between the completeness phase to determine if the
application contains all the information required by the HMR, and the
evaluation phase to determine if the application is technically
complete, is confusing. Further, the NPRM's preamble stated the
evaluation phase will be used to ``determine if the

application is complete.'' This duplication is needless and will slow
the processing of the application. Therefore, in this final rule PHMSA
is revising the Appendix to clarify the difference between the
completeness phase and the evaluation phase.
Fitness Determination Procedure
    The IME also expressed concern with the procedures and policies
PHMSA is using to determine ``fitness.''

    PHMSA states that ``incorporating an elaborate review system
into the HMR . . . would be extremely difficult [given] the wide
range of applicants.'' PHMSA is not alone in the realization that
establishing standards to fairly and accurately determine fitness of
a myriad of private entities is a daunting task. The Federal Motor
Carrier Safety Administration (FMCSA) has been attempting to update
its fitness standards for years. However, PHMSA proposes to overcome
the difficulty of this task by ``incorporat[ing] a more
straightforward, user-friendly review system.'' While we can hope
for a process that is straightforward and user-friendly, first and
foremost PHMSA needs to accurately disclose the process and
standards it is using.

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

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

    PHMSA disagrees. As stated earlier in this preamble, when PHMSA
receives multiple applications from one entity within a short period of
time, PHMSA consolidates these applications when performing its safety
review. PHMSA has a five-year plan for reviewing cylinders but a one-
year plan for reviewing explosives because we have developed our
program to be responsive to the level of risks associated with these
materials. However, PHMSA does not have the resources to commit to
reviewing special permit and approval applicants every four years.
PHMSA increases the frequency of its inspections involving materials
with greater incident risks regardless of the type of applicant.
On-Site Reviews for Fitness Determinations
    In its comments, the IME recommended that:

    The onsite reviews of fitness be reserved to a small set of
applicants that have a history of serious hazmat incidents. However,
PHMSA believes that these reviews should be a standard part of the
process since onsite reviews are necessary to support the
``accuracy'' of the determination. This statement appears to
conflict the fitness triggers that suggest only applicants exceeding
certain performance thresholds would be subject to an onsite
inspection. Additional agency justifications for onsite reviews--
specifically whether packagings and/or operations requested are safe
or what additional operational controls or limitations may be
needed--may be relevant to the technical evaluation, but not to the
determination of fitness. Finally, we agree that an onsite visit may
be used to clear up misunderstandings or inaccuracies. However, the
option to conduct an onsite review in these instances should be in
response to a request from the applicant. Onsite reviews are no
doubt the most costly aspect of the fitness determination process.
As noted, some applicants may file multiple applications in a short
timeframe. We continue to believe that onsite reviews should only be
triggered when fitness cannot be demonstrated by some other means.

    PHMSA disagrees that on-site reviews would be required for all
applicants. PHMSA plans to conduct on-site reviews for only a small
percentage of companies that are determined to have failed a safety
profile review. However, an on-site review is not required to make a
determination of ``unfit.'' Since 2010, PHMSA performed on-site reviews
of five or fewer companies and none were determined to be unfit. PHMSA
agrees that on-site reviews and accompanying close-out consultations
are opportunities to clear up misunderstandings and inaccuracies.
Data Accuracy
    In response to a solicitation by PHMSA to comment on data accuracy,
the IME comments that:

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

    The vast majority of information PHMSA uses to conduct its carrier-
specific fitness reviews, but not general hazardous material reviews,
is contained in FMCSA's databases. PHMSA contacted other modal agencies
to obtain similar incident data but these agencies either did not have
the information needed or were not willing to make this information
available to PHMSA. FMCSA's databases are well organized and the agency
is willing to share them with PHMSA. PHMSA understands that FMCSA is
revising its databases and considering ways to make this information
more available to the public. When PHMSA first developed its Hazardous
Materials Information System (HMIS) and Hazmat Intelligence Portal
(HIP) databases, its intent was to make this information available to
the general public. However, PHMSA was unable to complete this step due
to budget and software design considerations. PHMSA intends to revise
the HMIS, HIP, or other prospective application processing technology,
to make the information it contains available to the public in the
future.
Fitness Standards
    The IME addressed fitness standards in its comments as follows:

    The standards by which PHMSA determines ``fitness'' have
profound implications for applicants. PHMSA still proposes a three-
tiered review process. PHMSA explains that the applicant is first
screened to see if a SPR [safety profile review] is triggered.
Second, if a SPR finds any of a second set of risk indicators, an
onsite review is triggered. Third, PHMSA's field operations staff
(FOS) will submit a fitness memorandum with a recommendation of fit
or unfit. However, this process continues to be seriously flawed:
    [ssquf] Incident Triggers: PHMSA states that it is removing low-
level incident data from its tier 1 automated fitness determination
process, and focusing on three incident categories to trigger a
SPR--incidents resulting in death, incidents resulting in injury,
and ``high-consequence'' incidents. However, there are no
definitions of ``injury'' or ``high-

consequence.'' First, we would urge PHMSA to adopt the same
definition it uses for a ``major injury''--one that requires a
hospitalization--when reporting hazardous materials incidents as the
definition of ``injury'' under the fitness standard. Second, PHMSA
also needs to define ``high-consequence'' incident, and that
definition must filter what incidents will trigger a tier 3 onsite
review under the ``Table 1'' and ``bulk packaging'' tier 1 automatic
screen. These tier 1 screens require that two or more incidents
involve a Table 1 applicant or, in the case of a bulk packaging
applicant, three or more incidents, in order to trigger a tier 2 SPR
referral. During the SPR, PHMSA states that incidents not attributed
to the applicant are dropped. However, we disagree with PHMSA's
policy that ``any'' of these attributable Table 1 or bulk package
incidents would then trigger a tier 3 onsite review regardless of
outcome. Just because the incident involved these materials or
equipment does not ipso facto mean that the result of the incident
was ``high-consequence.'' Such an interpretation would negate
PHMSA's promise that it is removing ``low-level incident data'' from
the fitness determination. (Also see comments on review triggers
below.) We do agree with PHMSA that an incident resulting in a death
or injury (requiring hospitalization) attributable to the applicant
(other than driver error) is an appropriate standard to trigger a
tier 3 review. Finally, an incident attributable to a ``package''
may be relevant for a technical evaluation, but it is unclear why
such an incident would be relevant to the fitness determination.
    [ssquf] Conflicting Tier 1 Triggers: Despite the statement above
that only three types of high consequence incidents would trigger a
fitness review, PHMSA states that a ``pattern of minor violations
may reveal larger problems that could adversely affect
transportation safety.'' Again, this statement appears to negate
PHMSA's statements about what standards may result in a
determination of ``unfit.''
    [ssquf] Conflicting Tier 2 Triggers: In the preamble, PHMSA
states that it has revised its SOP to base fitness evaluations (and
SPRs) on incidents and/or violations revealing ``flagrant patterns
and serious violations.'' (Emphasis PHMSA's.) Later in the preamble,
PHMSA states that ``the suggestion to ignore minor leaks in
packaging may not be inconsequential depending on the risks
contained in the material, and, therefore, [PHMSA] may not eliminate
this as a consideration in a fitness evaluation.'' The preamble also
states that a trigger for a tier 2 SPR is ``two or more prior
enforcement case referrals.'' However, PHMSA's proposed ``Appendix
A'' states that the trigger is met if the applicant has ``a [i.e.,
one] prior enforcement case referral.'' These conflicting statements
confuse rather than clarify agency policy and practice. PHMSA needs
to clarify these discrepancies.
    [ssquf] Tier 3 standard/What is ``Fit''?: Most concerning about
PHMSA's notice is that applicants unlucky enough to find themselves
with a tier 3 onsite review still do not know what will be examined
in an onsite inspection or what standard of performance will yield a
finding of ``fitness.'' PHMSA states that, during the inspection,
``investigators'' will search ``for evidence that an applicant is at
risk of being unable to comply with the terms of [any applicable]
special permit, approval, or . . . HMR.'' In fact, PHMSA states that
the FOS may initiate audits of the applicant's operations when
determining fitness. PHMSA should provide examples of ``evidence''
that would put an applicant at risk, and clarify what records will
have to be produced, who onsite can expect to be interviewed, and
how long an onsite review can be expected to take. The onsite
inspection should conclude with a closing conference outlining
options applicants will have to learn of and address any identified
concerns. We assume an inspection report will be prepared. Please
clarify whether the applicant will receive a copy. Without some
limitations, these inspections could degenerate into fishing
expeditions. The uncertainty of what level of performance would
produce a finding of ``fit'' is a burden that will only be borne by
U.S. businesses.
    [ssquf] Judge and Jury: FOS have been delegated responsibility
for the fitness review process for all decision-making after the
initial automated review. Although PHMSA proposes that the associate
administrator will ``review'' all special permit and approval
applications, the permit or approval can be issued by individuals
other than the associate administrator. We are concerned that too
much authority for the fitness review, inspection, and determination
is left in the hands of one individual. If the associate
administrator has delegated the final decision on a fitness
determination to FOS, at minimum, FOS should have to get the SPAP to
sign-off on the decision.

    The information PHMSA uses for safety profile reviews acquired from
the incident report forms is standardized. High-consequence/injury
events are similar to requirements which trigger National Response
Center reporting under Sec.  171.15. Incident reports may also be
caused by incorrect package assembly or improper maintenance. Fitness
coordinators will consult this information in addition to that provided
in an application and, if clarifying information is needed, will
contact the applicant to obtain it. If the information the applicant
provides is sufficient, an on-site inspection may not be necessary.
Also, participation from PHMSA's Engineering and Research Division may
be required. PHMSA will conduct an on-site review if it has evidence
that: (1) An applicant is at risk of being unable to comply with the
terms of an application; (2) any incident listed under paragraph
3(b)(i)(1) of the Appendix A to Part 107 is attributable to the
applicant or package, other than driver error; (3) during an inspection
in the four years prior to submitting the application an applicant has
not implemented sufficient corrective actions for prior violations, or
is at risk of being unable to comply with the terms of an application
for or an existing special permit, approval, or the HMR; or (4)
incorrect or missing markings, labels, placards or shipping papers. The
safety profile evaluation will normally follow the same procedures as
an inspection. As stated earlier, the FOPS officer or OA representative
will provide an exit briefing to document any observed violations,
including those which may affect fitness determinations. After PHMSA's
Field Operations Division staff, or a representative of the Department,
completes the safety profile evaluation the FOPS staff person or OA
representative will make a recommendation to PHMSA's Approvals and
Permits Division if a company is fit or unfit. PHMSA's Approvals and
Permits Division will make the final fitness determination. Denied
applicants have a right to reconsideration and appeal of that decision
as prescribed in Sec. Sec.  107.123, 107.125, 107.715, and 107.717.
Further, PHMSA must include the scope of its inspection
responsibilities under the HMR in the safety profile reviews it
conducts.
Presumption of Guilt
    In its comments, IME stated that:

    PHMSA states that the process it has implemented ``does not
presume innocence or guilt'' of an applicant. However, ``new
companies with no performance history'' will still be subject to a
fitness determination. PHMSA's treatment of new companies is one
that presumes non-compliance. These reviews will be based on a new
company's ``training records.'' Training records are only available
for review onsite. Consequently, new companies will automatically
find themselves pushed to a tier 3 inspection. We disagree that new
companies automatically warrant this costly level of review.
Additionally, PHMSA states that ``select holders'' who have never
been inspected will be automatically referred for a tier 2 SPR.
Again, this criterion is based on a presumption of non-compliance.
This fact alone should not be a justification for a fitness review.

    PHMSA agrees that an applicant's history should not imply a
presumption of guilt and there is no need to require on-site review of
hazmat matters with lower risk, such as training records. PHMSA does
not believe that an applicant's lack of data is correlated to non-
compliance. New companies are automatically presumed to pass their
safety review since they have no ``triggers'' in the system. However,
the fact that a company is new does not prevent PHMSA from doing
inspections under other sections of the HMR.

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

    PHMSA states that it coordinates application evaluation with DOT
modal agencies when the application is ``mode specific, precedent
setting, or meet[s] federal criteria for a `` `significant economic
impact'.'' We question the rationale for involving a modal agency in
any application that does not involve the mode irrespective of
whether it is precedent setting, or of significant economic impact.
Furthermore, all modes have their own standards for determining
``fitness.'' PHMSA should not allow modal agencies to use PHMSA's
fitness procedures to impose more stringent fitness requirements
than already exist in their modal regulations. Likewise, PHMSA
should not use the fitness assessment process to impose its
interpretation of who is a fit carrier on the modal agencies. We
believe that the data reviewed should be relevant to the
application. If an application involves ``shipper'' activities,
``carrier'' incidents attributable to the applicant, for example,
should not be considered in the fitness determination. Likewise,
modal agencies should not be involved in classification approvals.
For example, applications for explosives classifications are based
on UN tests performed by PHMSA-approved laboratories. There is no
modal nexus to classification approvals.

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

    PHMSA states that rulemaking is not required because it
considers these criteria to be ``internal'' guidance for its staff.
Acting on this declaration, PHMSA proposes to incorporate its SOPs
and fitness criteria into the HMR only as an ``appendix.'' This
nomenclature and justification are troubling. Congress certainly
felt that the SPAP SOPs and fitness criteria warrant the status of a
rule, directing that ``regulations'' be issued by a date certain.
Moreover, to be crystal clear in its intent, Congress directed that
these rules be issued under the Administrative Procedure Act.
PHMSA's declaration that this appendix is simply guidance begs the
question of how the agency views the legal status of the document.
As ``guidance'', does PHMSA believe that the appendix can be
changed, after this initial ``rulemaking'', at will, as the agency
has done to the current SOPs? We ask PHMSA to resist any temptation
to treat the appendix as anything less than a regulation and to
clarify the legal standing of the ``appendix'' in the final rule.
Agency guidance issued without the benefit of careful consideration
under the procedures for regulatory development and review risks
being arbitrary and capricious.

    PHMSA disagrees. The Appendix prescribed in this final rule is
regulatory text that also performs as guidance because it discloses
PHMSA's administrative processes to the regulated public. To change the
language in this appendix, PHMSA must issue a rulemaking. Another
example of an appendix in the HMR that sets forth guidance is the
``List of Frequently Cited Violations'' in Appendix A of 49 CFR part
107, subpart D. Both inform the regulated public of general guidelines
PHMSA uses to make determinations.
Reconsideration/Appeals
    The IME noted that in the NPRM PHMSA proposed to process requests
for reconsideration and appeals of special permit and approval
decisions ``in the same manner . . . [as] new applications.'' It asked
``what is the point of making such a filing if the application will
simply be treated as a new application?'' In addition, IME stated that
``requests for reconsideration and appeals should be handled on a
separate track from new applications.''
    PHMSA agrees that applications for reconsideration and appeals will
be treated differently from regular special permit and approval
applications. Reconsideration requests are managed within the Special
Permit and Approvals Division in conformance with Sec.  107.123 for
special permits and Sec.  107.715 for approvals, and appeals are
managed outside of the Special Permits and Approvals Division by
PHMSA's Office of Chief Counsel. When an applicant requests
reconsideration of a denied application, the request is provided a
higher priority in the review process. Thus, a decision will tend to be
rendered more quickly since the initial review and evaluation has been
completed. Appeals are handled by the Office of the Administrator and
are not part of the routine special permit and approval evaluation
process.
Transparency and Accountability
    In its comments, IME noted that PHMSA describes its statutory
obligation to publish notice of the receipt of special permit
applications in the Federal Register. It also noted that, on its own
initiative, PHMSA also occasionally publishes final actions taken on
special permit applications. The IME recommended that PHMSA utilize
this rulemaking to institutionalize the publication of final decisions
on applications for special permits in the Federal Register.
    PHMSA is required by law to publish receipt and processing of its
special permit applications in the Federal Register. This is an ongoing
activity and cannot be addressed by issuing these decisions once in
this final rule.
Organizational Issues
    IME noted that:

    PHMSA enumerates six screening criteria used during the tier 1
automated fitness review. Screens 5 and 6 should be listed as
standalone provisions. In contrast to screens 1 through 4, the
criteria in screens 5 and 6 are not derived from the occurrence of a
high-consequence event or an enforcement action. Rather, they are
descriptions of when and how the automatic review will be conducted
for particular applicants.
    Additionally, we question the inclusion of screen 6 in this
section of the rule in light of a correction notice recently issued
by PHMSA which clarifies that only those applicants who do not
require coordination with an Operating Administration (OA) would be
subject to the tier 1 review. Yet, screen 6 describes the review
that applicants who are interstate carriers would undergo which is
based on criteria of FMCSA, an OA. It seems intuitive that PHMSA
would ``coordinate'' with FMCSA for the data used in this review.

    PHMSA agrees with the IME and will revise the language in the
Appendix of this final rule to make this correction. Further, the
trigger selection process is an automated review and done without FMCSA
interaction.
Interim Process
    IME comments that Congress directed PHMSA to issue the regulations
contemplated by this rulemaking no later than September 30, 2014.
However, the comment period for the NPRM did not close until October
14, 2014, and the statutory deadline will obviously be missed. In light
of these developments, IME expresses concern about the SOPs and fitness
criteria that PHMSA will continue to use before the rule is
promulgated. The IME expresses the hope that PHMSA will make changes to
current practices and standards, but in the interim, exercise restraint
in how it carries out any punitive actions using unauthorized
procedures and criteria.
    PHMSA has undergone its best effort to meet the deadline mandated
for this rulemaking by the Congress in MAP-21. The provisions the
commenter is requesting will become effective through the issuance of
this final rule.

PHMSA does not plan to implement interim SOPs or fitness criteria or
make changes to its current practices and standards before the ones
prescribed in this final rule are implemented. Therefore, PHMSA has
addressed the commenter's concerns.
Miscellaneous
    In its closing comments, the IME makes several recommendations:
    (1) PHMSA may wish to clarify the following statements:

    A. Further, the HMR permit, in various sections, some federal
agencies limited authority to directly issue certain types of
approvals because of the proven safety of the type of action and/or
process requested in the approval, and the subject matter expertise
each agency can provide regarding hazardous materials
transportation.
    B. During the evaluation phase, if the tasks or procedures
requested in each special permit or approval application are
determined to provide an equivalent level of safety to that required
in the HMR or, if a required safety level does not exist, that they
provide a level of safety that demonstrates an alternative
consistent with the public interest that will adequately protect
against the risks to life and property inherent in the
transportation of hazardous materials.
    (2) PHMSA's proposed definition of ``applicant fitness'' at
Sec.  107.1 is incorrect based on the preamble statement. Rather
than ``. . . a determination by PHMSA . . .'', the text should read
``. . . a determination by the Associate Administrator . . .''.

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

E. Reusable Industrial Packaging Association

Data Used for Fitness Determination
    The Reusable Industrial Packaging Association (RIPA) supports
PHMSA's stated intention in the NPRM to remove ``low-level'' incident
data from fitness determinations, focusing rather on high-level
incidents involving death, injury, or other ``high-consequence'' cases.
RIPA does not believe an isolated incident or a reported packaging
leak, with no other attendant consequences, warrants a rejection of
fitness. RIPA also supports PHMSA's proposal to limit the historical
period to 4 years over which the agency will review an applicant's
performance history, citing it as ``practical and more than sufficient
to ensure safety.'' RIPA requested that PHMSA ``. . . avoid linking a
rejection or denial of an application to a single metric or a single
occurrence in an applicant's history.'' PHMSA has revised the guidance
document to emphasize high-level incidents, but disagrees that it must
not consider an isolated incident or package leak depending on how
seriously the incident affects safety. If a single incident leads to
death, serious injury, or a high-consequence event, rejection of that
application would be appropriate and satisfy PHMSA's mission.
Delays in Processing Approval Applications
    RIPA stated ``PHMSA should address how its proposed modifications
to the approval procedures will affect the increasing delays in
processing approval applications. According to data recently supplied
by the agency, as of October 6, 2014, there were 783 approval
applications that had been in process for more than 120 days without a
decision. As of July 7, 2014, there were only 570 approval applications
older than 120 days. In just three months, the number of applications
beyond the 120-day threshold has grown over 37 percent.'' One of the
purposes of PHMSA's SOPs is to aid the agency in decreasing its delays
in processing special permit and approval applications by ensuring that
PHMSA begins its review with as complete an application as possible.
    PHMSA disagrees. As stated earlier in this preamble, PHMSA is not
restricted to a 120-day deadline. PHMSA has a responsibility to
authorize only those activities deemed safe in transportation and must
not institute practices that would ignore this responsibility. Each
application can be unique and require different types of complex
information to complete its review, and PHMSA continues to work to
improve processing times.
Approval Technical Template
    RIPA is concerned the additional levels of scrutiny for approval
applicants in the proposed SOPs will add to PHMSA's delays in
processing applications. RIPA also stated it asked in prior comments to
the agency (February 29, 2012; Paul W. Rankin to Docket No. PHMSA-2011-
0283--see http://www.regulations.gov/#!documentDetail;D=PHMSA-2011-
0283-0003) how PHMSA can ask an applicant to ``demonstrate its
readiness to meet the terms of an approval if, in fact, the large
investment required cannot be made without some certainty of being
approved. PHMSA should articulate a process to encourage the adoption
of new and better technologies without the huge uncertainty that the
application process currently presents.'' RIPA suggested PHMSA
implement an ``approval technical template . . . as a guideline for
applicants seeking the same (or very similar) approval. Such a template
might also help applicants understand better the threshold for a
`complete' application.'' RIPA believes that ``PHMSA's plans to codify
into the HMR certain approvals with wide applicability and records of
safety could also go a long way in disseminating new technologies and
safe practices.''
    PHMSA agrees with RIPA that some types of approvals require less
scrutiny than others and, thus, take less time to review. PHMSA also
agrees that creating templates to help applicants meet SOPs targets
would aid the applicants with successfully completing their
applications. However, all forms and other types of government requests
from the public must first be developed and cleared through the Office
of Management and Budget. PHMSA has not developed a template under this
rulemaking, and, as a result, this activity is outside the scope of
this rulemaking. Therefore, PHMSA must decline this request.
Insufficient Corrective Actions
    RIPA found that PHMSA's proposed criteria for ``insufficient
corrective actions'':

. . . taken following two or more prior enforcement cases is a
standard so broad as to be nearly meaningless. If corrective actions
were insufficient, isn't the applicant still out of compliance?
Also, who makes a determination of ``insufficient corrective
action''? Is there a document trail to follow in making such a
determination? What if those cases were several years in the past,
and were administered by wholly different personnel? Does the
proposed 4-year historic limit apply here?

    PHMSA agrees with RIPA that it should add more clarity regarding
the term ``insufficient corrective action.'' This will aid applicants
as well as those conducting reviews to determine whether an applicant
meets these criteria. Additionally, this will greatly aid the review
and processing of applications, and clarify to applicants when a
corrective action is satisfactory under the HMR. Therefore, PHMSA has
added this definition to Sec.  107.1.
On-Site Inspections
    RIPA believes on-site reviews should be limited to the most serious
instances of safety concerns. However, it states that the criteria for
``fit or unfit'' remain somewhat malleable, and could support the
rejection of an application based on a FOPS Division agent
recommendations that may be far removed from the narrow special permit
or approval being sought. RIPA requests that an on-site review of an
applicant for an approval need not be a ``curb-to-curb'' inspection,
but a limited review of the operation or packaging in question, and
that inspectors should

take action only on compliance issues ``in plain sight.'' RIPA states
in its experience, this threshold provides equivalency in terms of
public safety.
    As stated earlier in this final rule, an applicant that has not
implemented sufficient corrective actions for prior violations, or is
at risk of being unable to comply with the terms of an application for
a special permit or approval, an existing special permit or approval,
or the HMR, must be evaluated by PHMSA to determine that the applicant
is unfit to conduct the activities requested. A full inspection is
necessary for a complete assessment of the company's capabilities.

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

    The Sporting Arms and Ammunition Manufacturers' Institute, Inc.,
(SAAMI) expresses appreciation of PHMSA's efforts to engage in a
rulemaking process regarding the procedures for special permits and
approvals applications to allow review and comment by stakeholders. It
stated that such a rulemaking addresses concerns with non-transparency
when internal policies are enforced but not published. In addition,
SAAMI supported the proposed fitness review period of four years,
classification approvals not requiring a fitness review, and subjecting
applicants for party-to status on a special permit to the same fitness
standards as the original applicant. However, SAAMI also expressed
concerns ``that inflexible and non-accountable internal policies do
result in routine unjustified delays for industry operating in good
faith,'' and provided the following recommendations.
MAP-21 Requirements
    In its comments, SAAMI states the SOPs as guidance will not provide
``the accountability sought by industry and regulated by Congress''
under Congress' MAP-21 instruction to PHMSA to issue this guidance.
PHMSA disagrees. Congress directed PHMSA to issue regulations and
objective criteria that support the administration and evaluation of
special permit and approval applications. This final rule accomplishes
that directive.
    SAAMI references PHMSA remarks in the NPRM that the Appendix A is a
guidance document to be used by PHMSA for the internal management of
its special permits and approvals program. In addition, SAAMI questions
the scope of the rule, stating its view that the proposed criteria
cover fitness checks, but not other aspects of the evaluation of
applications, and also believes that the Appendix A to 49 CFR part 107
is not guidance, but rather is regulation. 49 CFR part 107, Appendix A,
is regulatory text because it is being published in the HMR. It also
serves as agency guidance in that it discloses PHMSA's administrative
processes to the regulated public. Similarly, Appendix A of 49 CFR part
107, subpart D, sets forth guidance in the HMR for frequently cited
violations. Both appendices inform the regulated public of general
guidelines PHMSA uses to make determinations.
Length of Time To Process Approvals
    SAAMI states its awareness that classification approvals are taking
``far too long to be issued.'' Specifically, SAAMI states the 120-day
timeline PHMSA currently uses ``is twice or more the typical time used
by other governments to issue similar approvals. This now has been
increased to 180 days in notices sent to applicants. Industry can't
function efficiently when their new product introductions are
delayed.'' However, SAAMI supports PHMSA delegating these
responsibilities to certified third parties, because it states ``the
number of PHMSA staff working on these approvals'' and ``the small
technical team responsible for 20,000 approvals per year'' is
inadequate to quickly perform these tasks, especially when diverted by
other work responsibilities like evaluating issues concerning crude oil
by rail or other technical questions. As stated earlier in this
preamble, PHMSA is not required to issue special permits and approvals
in 120 days, but instead must issue them when the agency has determined
that the actions requested in the application are safe. Further, PHMSA
is streamlining its internal and online practices for processing
special permit and approval applications, and will strive to improve
these processing times in the future, especially with regard to
explosives and fireworks.
Routine Revisions
    SAAMI states that for non-significant ``routine revisions to
special permits and approvals, such as a company changing its name or
acquiring another company . . . [PHMSA] has been inflexible in the
application of its internal, non-regulatory requirements for complete
documentation of test result, packaging and so forth when there has
been no change to the operations at the facility.'' Noting that ``some
companies have hundreds or over a thousand classification approvals,''
SAAMI states that these approvals should not be required to meet the
new completeness criteria and ``undergo a technical review with a
complete data package as is currently the case.'' SAAMI recommends
instead that these approvals be ``processed in batches as an
administrative function.'' SAAMI further recommends that requests for
tweaks to recently modified approvals ``. . . not go to the bottom of
the stack with an additional 180-day waiting period,'' as is also
currently required, and that PHMSA resolve its recordkeeping problems
``rather than making companies resubmit complete data packages'' as
described in the NPRM preamble. As stated earlier in this preamble,
PHMSA currently does not have the resources to institute a separate
processing method for routine and editorial revisions but will consider
changes of this type as resources become available.
Timelines
    SAAMI notes that special permits have determination timelines in
Sec.  107.113(a) but that approvals do not have similar provisions in
Sec.  107.709, and recommends that these sections be aligned.
Similarly, SAAMI recommends that the deadline that exists in Sec.
107.709 that requires applicants to respond to PHMSA's requests within
30 days also be applied to special permit applicants in Sec.  107.113.
SAAMI also recommends that PHMSA consider adding timelines to its
responses to requests for reconsideration and appeals, which currently
apply only to stakeholders. PHMSA disagrees. As stated earlier in this
preamble, PHMSA is not subject to the timelines in the HMR prescribed
for applicants to submit special permit and approval applications for
processing and renewal. PHMSA must ensure the activities requested in
these applications are safe before approving these requests.
Fitness Procedures
    SAAMI's comments regarding fitness procedures indicated that PHMSA
should focus on the most serious safety concerns and believe that some
of the criteria PHMSA proposes to use to evaluate an applicant's
fitness are not adequate to make this assessment. PHMSA agrees and has
made these changes.
    SAAMI noted that of the six criteria listed in proposed Appendix A
paragraph (3)(i), two refer to ``incidents.'' SAAMI recommends PHMSA
define ``incidents'' ``to ensure that only serious incidents will be
factored in.'' PHMSA declines this request. ``Incident'' is already
defined in Sec.  107.1 as ``. . . an event resulting in the unintended
and unanticipated release of a hazardous material or an event

meeting incident reporting requirements in Sec. Sec.  171.15 or 171.16
of this chapter.''
    SAAMI noted that although the criterion for insufficient corrective
action relevant to a prior enforcement case is defined, the definition
merely states that the fitness officer has made a determination. SAAMI
recommends that this determination be quantified and the subsequent
criteria be published in a rulemaking for transparency, due to the
serious impact of application rejection. PHMSA disagrees. Special
permit and approval applications are reviewed on a case-by-case basis
because they are often unique and sometimes include information subject
to applicant confidentiality requests. PHMSA believes providing
specific determinations and corrective actions directly to an applicant
is the most effective way to convey the compliance information where it
is needed. Also, as stated earlier, PHMSA has revised this final rule
to establish two, instead of four, triggers of violations for each
applicant for a safety profile review or five or more triggers for an
on-site inspection enforcement case referral event. Either will result
in a failed automatic safety profile evaluation recommendation. Fitness
Coordinators will follow-up with the applicant to provide and obtain
clarifying information.
    SAAMI recommends that to reduce subjectivity in safety profile and
on-site fitness reviews, PHMSA document the criteria used to make these
determinations. SAAMI also suggests that minor violations of the HMR
that do not seriously impact safety not be factored in a fitness
review. To address this issue, SAAMI further recommends that PHMSA
``create a threshold below which violations are not factored in the
review, or if a pattern of minor violations are taken into [e]ffect,''
PHMSA should create a metric to determine what is a pattern and provide
an opportunity for public comment. PHMSA disagrees. For the two trigger
violation thresholds, only enforcement cases are factored in.
Enforcement cases only pertain to serious safety violations.
    Finally, SAAMI states ``there is too much subjectivity inherent in
the proposed authority to be given to the PHMSA Field Operations
Officer or authorizing Operating Administration representative.'' SAAMI
requests that violations be given an administrative second check to
verify that they exist and that PHMSA should provide recourse to a
company to challenge such findings without their having to resubmit a
data package. SAAMI recommends that for applicants with multiple or
frequent applications, ``fitness reviews[,] including on-site
reviews[,] should not be conducted until after a certain time has
elapsed since the last review.'' Without such limits, SAAMI states,
``the review becomes just a paper exercise using scarce resources of
the agency.'' PHMSA disagrees. As stated earlier, the fitness
coordinator will contact the applicant for clarifying information that
may eliminate the need for an on-site inspection. Violations in case
reports are given second reviews by a first-line supervisor in the
field and then by PHMSA legal counsel. Subsequent reviews are only
completed up to the time of the last review to determine if something
serious happened since the last review.
Closing Recommendations
    SAAMI closes out its comments by providing a list of
recommendations. They are as follows:
    SAAMI recommends that PHMSA align the description of the type of
approvals with those listed for special permits by adding
classification, non-classification and registration approvals, noting
that the NPRM ``lists all types of special permits but only agency
designation approvals. Classification, non-classification and
registration approvals are not listed.'' PHMSA disagrees. The Appendix
in this final rule provides this exact information in the table
``Special Permit and Approval Evaluation Review Process.''
    SAAMI requests that PHMSA clarify in Appendix paragraph (3)(b)(ii)
who will perform the fitness check when more than one OA is involved to
streamline the process and clarify that PHMSA's performance of a
fitness review is not an additional [seventh] fitness review criterion.
SAAMI recommends that PHMSA perform the fitness review if more than one
OA is involved using this language: ``The applicable OA performs a
profile review if one mode of transportation is requested in the
application[;] however, PHMSA [will perform] the review if two or more
modes of transportation are included.'' PHMSA agrees that we do, and
would oversee and not perform a safety profile evaluation if more than
one mode is needed.
    SAAMI requests that PHMSA clarify that OA's will not be permitted
``to use fitness procedures to impose more stringent fitness
requirements than already exist in the OA's regulations.'' While PHMSA
agrees that this clarification would be useful, this action is beyond
the scope of this rulemaking because it is dictated by each OA's
internal process documents. All special permit and approvals subject to
OA coordination will be subject to OA criteria for fitness and not all
of the OA criteria are regulatory. For example, air carrier fitness
will be based upon whether or not the air carrier has ``will-carry''
status and is fit to fly. Therefore, FAA cannot in good conscience say
an air carrier is fit to perform the activities prescribed in a special
permit when the carrier has been assessed as not fit to fly. Therefore,
PHMSA denies this request.
    SAAMI points out that in Appendix A (3)(b)(iii), the reference to
(3)(b) refers to itself, and suggested revising the reference to
(3)(b)(i) and (3)(b)(ii). PHMSA agrees and has made this correction.
    SAAMI requests that the language in Appendix paragraph (4)(a) and
(4)(b) be revised to clarify that special permit and approval
applications are not issued. PHMSA agrees and has made this correction.

IV. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

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

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

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

reviewed by the Office of Management and Budget (OMB). The final rule
is not considered a significant rule under the Regulatory Policies and
Procedures order issued by the Department of Transportation [44 FR
11034].
    Executive Orders 12866 (``Regulatory Planning and Review'') and
13563 (``Improving Regulation and Regulatory Review'') require agencies
to regulate in the ``most cost-effective manner,'' to make a ``reasoned
determination that the benefits of the intended regulation justify its
costs,'' and to develop regulations that ``impose the least burden on
society.'' Executive Order 13563 supplements and reaffirms the
principles governing regulatory review that were established in
Executive Order 12866, Regulatory Planning and Review of September 30,
1993. Additionally, Executive Orders 12866, and 13563 require agencies
to provide a meaningful opportunity for public participation.
Accordingly, PHMSA invited public comment on these considerations at a
public meeting held on February 29, 2012 (see Docket No. PHMSA-2011-
0283), and in the NPRMs issued on August 12, 2014, and September 12,
2014, under Docket No. PHMSA-2012-0260. PHMSA requested that the public
include in its comments any cost or benefit figures or factors,
alternative approaches, and relevant scientific, technical and economic
data. These comments aided PHMSA in the evaluation of the proposed
requirements. PHMSA has since revised our evaluation and analysis to
address the public comments received.
    In this final rule, PHMSA amends the HMR to incorporate SOPs for
processing and issuing special permit and approval applications.
Incorporating these provisions into regulations of general
applicability will provide shippers and carriers with clarity and
flexibility to comply with PHMSA's initial review and, as needed,
subsequent renewal or modification process. In addition, the final rule
would reduce the paperwork burden on industry and this agency from
delays in processing incomplete applications. Taken together, the
provisions of this final rule would improve the efficacy of the special
permit and approval application and issuance process, which will
promote the continued safe transportation of hazardous materials, while
reducing transportation costs for the industry and administrative costs
for the agency.
    While the majority of commenters did not suggest this rulemaking
would impose any cost to the regulated community, IME did note costs
and benefits change when the procedures and standards change. PHMSA
agrees that changes to procedures could impact both cost and benefits,
but we reiterate this rulemaking does not change current practices;
rather, it simply codifies current operating procedures of the Approval
and Permits Division. Therefore, PHMSA does not anticipate increased
cost and the impact of this final rule is presumed to be minor. It
intends to provide clarity by reducing applicant confusion regarding
the special permit and approval application and renewal process, and
improve the quality of information and completeness of the application
submitted. Although it is difficult to quantify the savings, many
special permits and approvals have economically impacted companies by
improving the efficiency and safety of their operations in a manner
that meets or exceeds the requirements prescribed in the HMR. Some
examples of positive economic impacts include allowing the use of less
expensive non-specification packages, reducing the number of tasks, or
other methods that reduce costs incurred before the approval or special
permit is issued. As a result, PHMSA calculates that this final rule
does not impose any costs on industry. Although a slight reduction in
the costs associated with processing delays may provide nominal
benefits, generally, this final rule affects only agency procedures;
therefore, we assume no change in current industry costs or benefits.

C. Executive Order 13132

    This final rule was analyzed in accordance with the principles and
criteria contained in Executive Order 13132 (``Federalism''). This
final rule would preempt state, local and Indian tribe requirements but
does not propose any regulation that has substantial direct effects on
the states, the relationship between the national government and the
states, or the distribution of power and responsibilities among the
various levels of governments. Therefore, the consultation and funding
requirements of Executive Order 13132 do not apply. Federal hazardous
material transportation law, 49 U.S.C. 5101-5128, contains an express
preemption provision (49 U.S.C. 5125(b)) preempting state, local and
Indian tribe requirements on certain covered subjects. The covered
subjects are:
    (1) The designation, description, and classification of hazardous
materials;
    (2) The packing, repacking, handling, labeling, marking, and
placarding of hazardous materials;
    (3) The preparation, execution, and use of shipping documents
related to hazardous materials and requirements related to the number,
contents, and placement of those documents;
    (4) The written notification, recording, and reporting of the
unintentional release in transportation of hazardous materials; and
    (5) The designing, manufacturing, fabricating, inspecting, marking,
maintaining, reconditioning, repairing, or testing a package, container
or packaging component that is represented, marked, certified, or sold
as qualified for use in transporting hazardous material in commerce.
    This final rule addresses covered subject items (1), (2), (3), and
(5) and would preempt any State, local, or Indian tribe requirements
not meeting the ``substantively the same'' standard. 49 U.S.C.
5125(b)(2) states that if PHMSA issues a regulation concerning any of
the covered subjects, it must determine and publish, in the Federal
Register, the effective date of Federal preemption. The effective date
may not be earlier than the 90th day following the date of issuance of
the final rule, and not later than two years after the date of
issuance. PHMSA proposes the effective date of federal preemption will
be 90 days from publication of the final rule in this matter in the
Federal Register.

D. Executive Order 13175

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

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

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to review regulations to assess their impact on small entities.
An agency must conduct a regulatory flexibility analysis unless it
determines and certifies that a rule is not expected to have a
significant impact on a substantial number of small entities.
Incorporation of these SOPs into regulations of general applicability
will provide shippers and carriers with additional flexibility to
comply with established safety requirements, thereby reducing
transportation costs and increasing productivity. Entities affected by
the final rule conceivably include all persons--shippers, carriers, and
others--who offer and/or transport in commerce hazardous materials. The

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

F. Paperwork Reduction Act

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

G. Regulation Identifier Number (RIN)

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

H. Unfunded Mandates Reform Act of 1995

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

I. Environmental Assessment

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

The need for hazardous materials to support essential services means
transportation of highly hazardous materials is unavoidable. These
shipments frequently move through densely populated or environmentally
sensitive areas where the consequences of an incident could entail loss
of life, serious injury, or significant environmental damage.
Atmospheric, aquatic, terrestrial, and vegetal resources (for example,
wildlife habitats) could also be affected by a hazardous materials
release. The adverse environmental impacts associated with releases of
most hazardous materials are short-term impacts that can be greatly
reduced or eliminated through prompt clean-up of the incident scene.
Improving the process by which the agency assesses the ability of each
applicant to perform the tasks issued in a special permit improves the
chance that the tasks in each special permit issued will be performed
safely. Therefore, we do not anticipate any significant positive or
negative impacts on the environment by incorporating these SOPs into
the HMR.
Alternatives to the Proposed Action
    The purpose and need of this final rule is to establish criteria
for evaluating applications for approvals and special permits based on
the HMR, including assessing an applicant's ability to operate under
the approval or special permit. More information about benefits of this
final rule can be found in the preamble to this final rule. The
alternatives considered in the analysis include: (1) The proposed
action, that is, incorporation of SOPs to evaluate applications for
approvals and special permits based on the HMR, including assessing an
applicant's ability to operate under the approval or special permit
into the HMR; and (2) incorporation of some subset of these proposed
requirements (i.e., only some of the proposed requirements or
modifications to these requirements in response to comments received to
the NPRM) as amendments to the HMR; and (3) the ``no action''
alternative, meaning that none of the NPRM actions would be
incorporated into the HMR.
Analysis of the Alternatives
(1) Incorporate Special Permit and Approval Processing Standard
Operating Procedures
    We proposed clarifications to certain HMR requirements to include
those methods for assessing the ability of new special permit and
approval applicants, and those applying for renewals of special permits