Hazardous Materials Regulations: Penalty Guidelines (HM-258C)

Federal Register, October 2, 2013.

DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Part 107

[Docket No. PHMSA-2013-0045 (HM-258C)]

RIN 2137-AF02

Hazardous Materials Regulations: Penalty Guidelines

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

ACTION: Final rule; revised statement of policy.

SUMMARY: The Pipeline and Hazardous Materials Safety Administration (PHMSA) is publishing this revised statement of policy to update baseline assessments for frequently-cited violations of the Hazardous Materials Regulations (HMR) and to clarify additional factors that affect penalty amounts. This revised statement of policy is intended to provide the regulated community and the general public with information on the hazardous materials penalty assessment process.

DATES: This rule is effective October 1, 2013.

FOR FURTHER INFORMATION CONTACT: Meridith L. Kelsch or Shawn Wolsey, Office of the Chief Counsel, at (202) 366-4400, or Deborah L. Boothe, Standards and Rulemaking Branch, at (202) 366-8553, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION:

Contents

I. Background

II. Discussion of Revisions

A. Revisions to Part II, List of Frequently Cited Violations

B. Revisions to Parts III and IV

III. Regulatory Analyses and Notices

A. Statutory/Legal Authority for the Rulemaking

B. Executive Order 13610, Executive Order 13563, Executive Order 12866, 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. Regulatory Identifier Number (RIN)

H. Unfunded Mandates Reform Act of 1995

I. Environmental Assessment

J. Privacy Act

K. Executive Order 13609 and International Trade Analysis

L. National Technology Transfer and Advancement Act

I. Background

The Pipeline and Hazardous Materials Safety Administration (PHMSA) publishes hazardous materials transportation enforcement civil penalty guidelines in Appendix A to 49 CFR part 107, subpart D. The Research and Special Programs Administration (RSPA; PHMSA's predecessor agency) first published these guidelines in theFederal Register on March 6, 1995, in response to a request contained in Senate Report 103-150 that accompanied the Department of Transportation and Related Agencies Appropriations Act of 1994 (See 60 FR 12139). RSPA and PHMSA published additional revisions of these guidelines on January 21, 1997 (62 FR 2970), September 8, 2003 (68 FR 52844), February 17, 2006 (71 FR 8485), December 29, 2009 (74 FR 68701), and September 1, 2010 (75 FR 53593). These guidelines provide the regulated community and the general public with information about PHMSA's hazmat penalty assessment process and the types of information or documentation that respondents in enforcement cases can provide to justify possible reductions of proposed penalties.

PHMSA's field operations personnel and attorneys use these guidelines, which are updated periodically, as a standard for determining civil penalties for violations of the Federal hazardous materials transportation law (49 U.S.C. 5101-5128) and the regulations issued under that law. The baseline penalties and aggravating or mitigating factors outlined in these guidelines are a tool to aid PHMSA in applying similar civil penalties and adjustments in comparable situations. These baselines and adjustment criteria are based on factors PHMSA is required, under 49 U.S.C. 5123(c) and 49 CFR 107.331, to consider in each case. PHMSA selected the baseline penalties set out in Part II by considering the relative nature, circumstances, extent, and gravity of the particular violation. The aggravating and mitigating factors discussed in Parts III and IV represent all information PHMSA is required to consider under these provisions.

Since the guidelines are intended to reflect the statutory considerations, they are subject to adjustments, as appropriate, for the specific facts of individual cases. The guidelines are neither binding nor mandatory, but serve as a standard to promote consistency. Using the baselines as a starting point allows PHMSA to handle analogous violations similarly; and combining baselines with the mitigating and aggravating adjustments, helps us treat respondents in enforcement actions fairly. These baselines, however, only provide a starting point and may be adjusted as appropriate to reflect additional relevant factors. As such, they do not impose any requirement and are not binding.

As a general statement of agency policy and practice, these guidelines are not finally determinative of any issues or rights and do not have the force of law. They are informational, impose no requirements, and serve only as instruction or a guide. As such, they constitute a statement of agency policy and serve to provide greater transparency for effected entities. For these reasons, they do not establish a rule or requirement and no notice of proposed rulemaking or comment period is necessary. For further discussion of the nature and PHMSA's use of these penalty guidelines, see the preambles to the final rules published on March 6, 1995 (60 FR 12139) and January 21, 1997 (62 FR 2970).

II. Discussion of Revisions

In this final rule, PHMSA is publishing an updated statement of policy, revising Appendix A to Part 107, Subpart D, including the List of Frequently Cited Violations in Part II of the guidelines, and Parts III and IV, which provide additional factors that affect penalty amounts. The revisions to Part II include modifications to individual baseline assessments, the addition of frequently-cited violations that were not previously included in the guidelines, and assigned penalties instead of penalty ranges, where appropriate, to reflect safety risks, such as packing group. The revisions to Parts III and IV of the guidelines clarify the criteria PHMSA considers when determining a civil penalty amount that appropriately reflects the risk posed by a violation, the culpability of the respondent, and aggravating or mitigating factors.

A. Revisions to Part II, List of Frequently Cited Violations

The revisions to Part II of the guidelines are the result of inflation and statutory adjustments, as well as an overall review of the current penalty guidelines and regulatory requirements. PHMSA evaluated the baseline penalties to ensure they are comprehensive, clear, consistent, and appropriately reflect the safety implications of the violations.

As part of these adjustments, in this revised statement of policy, PHMSA is modifying the baselines in the List of Frequently Cited Violations in Part II of the guidelines to reflect inflation and the statutory increase in the maximum civil penalty, which took effect October 1, 2012. Both of these factors necessitate an overall increase in the baseline penalties.

Section 33010 of the Hazardous Materials Transportation Safety Improvement Act of 2012 (Title III of the Moving Ahead for Progress in the 21st Century Act (“MAP-21,”), Pub. L. 112-141, 126 Stat. 405, 837 (codified as amended at 49 U.S.C. 5123(a)) increased the maximum civil penalty for a knowing violation of the Federal hazardous materials transportation law, or a regulation, order, special permit, or approval issued under that law, from $55,000 to $75,000 and increased the maximum civil penalty from $110,000 to $175,000 if the violation results in death, serious illness or severe injury to any person or substantial destruction of property. This statutory change took effect October 1, 2012, and PHMSA incorporated these changes into the regulations effective April 17, 2013 (78 FR 22798). Since the maximum civil penalties have increased, it is appropriate to also increase the individual baselines for consistency.

Additionally, PHMSA is increasing individual baselines for inflation because many of the current baselines have not been adjusted since they were first published. Specifically, RSPA initially published the guidelines in 1995 (60 FR 12139). In 1997, RSPA adjusted the maximum civil penalty for inflation, added, deleted and combined several baselines, and altered several baselines to reflect the comparative risks of the violation for different hazardous materials. Again in 2003, RSPA adjusted the maximum and minimum civil penalties for inflation and added, modified, and increased several specific baselines (68 FR 52844). In 2006, PHMSA adjusted the maximum and minimum civil penalties, adopting the limits established by Congress in 2005 in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU; Pub. L. 109-59, 119 Stat. 1144 (codified as amended at 49 U.S.C. 5123(a))). At the same time, PHMSA adjusted a small number of individual baselines (71 FR 8485). Again in 2009, PHMSA adjusted the maximum and minimum civil penalties for inflation (74 FR 68701). The 2010 adjustments merely corrected errors in the 2009 calculations (75 FR 53593). Notably, since the guidelines were first published in 1995, certain individual baselines were adjusted but never comprehensively adjusted for inflation.

In order to remain consistent with the MAP-21 increase to the maximum civil penalties, as well as make appropriate adjustments for inflation, PHMSA reviewed the entire list of baseline penalties and generally increased them. We are not increasing all of the baselines, however, as we considered each individually to ensure the baselines appropriately reflect the safety implications associated with the particular violation.

For those baselines that PHMSA is increasing for inflation and consistency with MAP-21, we used a uniform calculation to determine the amount of increase. PHMSA determined the inflation adjustment by using the calculation found in the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Act), as amended by the Debt Collection Improvement Act of 1996 (the Act is set forth in the note to 28 U.S.C. 2461). The Act requires each Federal agency to adjust maximum and minimum civil penalties it administers at least every four years, to correspond with the effects of inflation, but applies a maximum increase of 10 percent for first-time adjustments. Congress, effective October 1, 2012 (see MAP-21 discussion above) adjusted the maximum and minimum penalties for inflation; so PHMSA is increasing only individual baselines.

Because this revised statement of policy does not address inflation adjustments for maximum and minimum penalties, the adjustments are not mandated, and the formula provided in the Act is not binding on these revisions. Nevertheless, PHMSA applied the formula in the Act to calculate the baseline increases, for consistency and continuity, as the Act is a standard recognized method of calculating inflation adjustments for regulatory penalties.

The formula for inflation adjustments set out in the Act provides that the increase is based on a “cost-of-living adjustment” determined by the increase in the Consumer Price Index (CPI-U) for the month of June of the calendar year preceding the adjustment as compared to the CPI-U for the month of June of the calendar year in which the last adjustment was made. In applying this calculation, PHMSA used 2003 as the year in which the last adjustment was made. This is because 2003 is the last time there were numerous adjustments and those revisions were the most similar to the current changes, in that there were extensive adjustments to individual baselines and not just maximum and minimum civil penalties. Since this revised statement of policy is adjusting individual baselines, 2003 represents the most-recent instance of comparable adjustments.

Applying the adjustment formula in the Act, PHMSA calculated the percentage by which the CPI-U in June 2012 (229.478) (the year preceding the adjustment) exceeds the CPI-U in June 2003 (183.7) (the year in which the baseline penalties were last adjusted). This comparison shows that the CPI-U increased by 25 percent during that period. Accordingly, PHMSA is increasing the baseline civil penalties by 25 percent. To avoid increasing any penalties by more than 25 percent, PHMSA rounded down the calculated adjustments to the nearest one-hundred dollars.

Although the Act provides a 10 percent limit on first-time adjustments, PHMSA is not conforming to this limitation for several reasons. First, many individual baselines have been adjusted before, so this is not a first-time adjustment. We are applying the same calculated inflation adjustment to all of the individual baselines that we are increasing for uniformity. To apply the 25 percent increase to those baselines that have been changed before, and 10 percent to those that have not, would create inconsistencies by creating larger differences between baselines that have been deemed comparatively appropriate in all prior revisions. Second, PHMSA is not required to comply with the 10 percent limit in these adjustments because the adjustments in this updated statement of policy are not mandated under the Act, as the Act does not apply to adjustments to individual baselines. Rather, we are merely using the Act as a uniform and recognized standard for consistency. Finally, the changes in MAP-21 increased the maximum civil penalty by approximately 36 percent (from $55,000 to $75,000) for a knowing violation and 59 percent (from $110,000 to $175,000) for violations resulting in serious harms. By comparison, a 25 percent increase to individual baseline penalties is significantly lower than the changes to the maximum civil penalties imposed by MAP-21.

Another change in this revised statement of policy is to add baseline penalties with violation descriptions to provide consistency and clarity for imposing similar penalties in similar cases. To identify violations that have been cited frequently but were not listed in the table of baseline penalties, PHMSA reviewed past Notices of Probable Violations and the regulations. We are now listing baseline penalties with violation descriptions in the List of Frequently Cited Violations for these violations. We are establishing these baseline penalties based on civil penalties that have been applied in past enforcement cases and by analogy to baselines for comparable violations that are already listed and relative safety implications.

In general, we are expanding the following categories in the List of Frequently Cited Violations: Security plans; Special permits and approvals; Undeclared shipments; Shipping papers; Emergency response requirements; Package marking requirements; Package labeling requirements; Placarding requirements; Packaging requirements; Offeror Requirements for specific hazardous materials: Cigarette lighters, Explosives, Radioactive Materials, Compressed Gases in cylinders; Packaging Manufacturers, Drum Manufacturers and Reconditioners, IBC and Portable Tank Requalification; Cylinder Manufacturers and Rebuilders; Cylinder Requalification; Incident Notification and Stowage/Attendance/Transportation Requirements. We are adding these new categories: Offeror Requirements for specific hazardous materials: Oxygen Generators and Batteries; Manufacturing, Reconditioning, Retesting Requirements: Activities subject to Approvals and Cargo Tank Motor Vehicles.

Another modification PHMSA is making in this revised statement of policy is to eliminate many baseline ranges (e.g., $3,000 to $6,000) in the List of Frequently Cited Violations, and replace them with specific baselines (e.g., $6,000 for PG I; $4,500 for PG II; $3,000 for PG III). Baseline ranges provided flexibility to adjust penalties depending on the safety risks or severity of a particular case. We will now divide many ranges into distinct baseline amounts that reflect the relative risks of specific packing groups, explosive classifications, or hazardous materials. Applying specific baselines instead of ranges will continue to reflect the relative safety risks of various hazardous materials within a particular violation, while assuring consistency and clarity.

Finally, PHMSA comprehensively reviewed the baseline penalties and descriptions, and we are adopting several modifications to ensure they are current, consistent, and appropriate. In this revised statement of policy, we are removing outdated or duplicative descriptions and updating language to reflect the regulatory text, where necessary. We are also decreasing and increasing baselines, as appropriate, to ensure comparable, similar, or related violations have commensurate baseline penalties and that each baseline reflects the risks associated with the violation.

B. Revisions to Part III—Consideration of Statutory Criteria and Part IV—Miscellaneous Factors Affecting Penalty Amounts

This statement of policy also modifies Parts III and IV of the guidelines, which provide factors that affect penalty amounts. As specified in 49 U.S.C. 5123(c) and 49 CFR 107.331, PHMSA must consider several factors when assessing a civil penalty, including the nature, circumstances, extent and gravity of a violation, the degree of culpability and compliance history of the respondent, the financial impact of the penalty on the respondent, and other matters as justice requires. As described below, PHMSA will also consider a respondent's corrective actions and that point in time at which those actions are taken. Parts III and IV elaborate on several of these factors and explain how PHMSA considers this information to adjust penalties, where appropriate.

In this revision, PHMSA is clarifying Parts III and IV to provide transparency and ensure consistency in how mitigating and aggravating factors affect penalty assessments. In general, we are modifying some of the language in these Parts to articulate clearly how PHMSA considers relevant information and performs adjustments. We are also adding new points that will enhance transparency and consistency.

1. Revisions to Part III—Consideration of Statutory Criteria

Previously, Part III—Consideration of Statutory Criteria has outlined the process PHMSA uses for setting initial penalties and listed the statutory criteria PHMSA must consider under 49 U.S.C. 5123(c) and 49 CFR 107.331. In this revision, we are providing this same information as well as additional details.

In the revised guidelines, we are still identifying the statutory considerations, but have revised the language to add greater clarity. Specifically, we have added details to elaborate on the information that may be relevant in considering the statutory criteria. For example, in evaluating the gravity of a violation, we explain that actual and potential consequences of a violation are factors we consider in setting a civil penalty in a case. We are including this and similar factors to help demonstrate the types of information that are pertinent to the statutory criteria.

We are also explaining where we obtain the information that is relevant to the statutory criteria and at what stages we collect it. Specifically, we may obtain information concerning the statutory criteria at any stage of the enforcement proceedings, and we may receive this information from any appropriate source, including the regulated entity. This additional information serves to clarify that determining a civil penalty is an ongoing process that develops throughout an enforcement proceeding. As such, this clarification notifies respondents in enforcement cases that they may provide relevant information to PHMSA at any stage and we will consider it.

Finally, we are providing a specific order in which PHMSA will apply increases and decreases to baseline penalty amounts. While the previous guidelines alluded to this, we are establishing a clear sequence of adjustments in this revision. Specifically, after selecting an appropriate baseline penalty, we will generally apply decreases for reshippers, increases for multiple counts, increases for prior violations, decreases for corrective actions, and then decreases for financial considerations, in order to consider all of the statutory criteria. Clearly establishing this sequence will provide for consistency in how respondents are treated in enforcement actions.

2. Revisions to Part IV—Miscellaneous Factors Affecting Penalty Amounts

In the revised guidelines, we are also modifying the language in Part IV—Miscellaneous Factors Affecting Penalty Amounts. These modifications provide greater clarity and transparency by revising language, including more detail, and setting out more-clearly defined procedures for applying aggravating and mitigating factors. We are also restructuring this section so that the factors are listed in the order in which PHMSA applies the penalty increases or decreases, as set out in Part III.

With respect to respondents that act as reshippers, we have revised the language in this section so that our procedures and relevant criteria are understandable. Additionally, we have extended the reshipper mitigating factor to carriers who reasonably rely on a shipment as they receive it and do not open or alter the package before continuing in transportation. We expanded this to carriers to reflect their similarity to reshippers in so far as both may receive fully-prepared shipments and rely on another party's preparation and compliance. Apart from extending this provision to carriers, we have not made any substantive changes to this section.

We are also modifying the provisions regarding multiple counts of a violation. The revised language provides more detail in describing how PHMSA handles multiple counts, which promotes greater consistency and transparency. Although this is a highly fact-specific determination, the additional language will provide more comprehensive guidance. For example, we are including fuller explanations of the factors that are relevant, such as whether multiple counts demonstrate a company's regular business practice. Additionally, we are including specific examples of when multiple counts may be treated as one violation, when a penalty may be increased by 25 percent for each additional count, and when separate counts may be warranted.

The provisions pertaining to prior violations are also being updated to establish a clear timeframe and consistent application. We are specifying that the six-year period used to evaluate increases for prior violations will be determined using the dates of the last exit briefings issued. Previously, this period was calculated using the date a case or ticket was “initiated,” without specifying what constituted initiation of a case. We are now specifying that the initiation date of a case is the date of the exit briefing. The date of the exit briefing best represents the date a case is initiated because it is the date a respondent first receives notice of a non-compliance issue and commences the enforcement process. Additionally, the date of the exit briefing is the most consistent measure that can be replicated for all cases.

Generally, an exit briefing is issued on or near the date a violation is found, whereas a ticket or Notice of Probable Violation may be issued substantially later and are not issued within the same time frame for all cases. Using a calendar year instead of a specific date can lead to some respondents being penalized for prior cases that happened more than six years previously (e.g., a prior violation in January 2007 would be within six years of a case issued in September 2013), while others are penalized for only less than a six-year period (e.g., a prior violation in December 2006 would be outside the six years for a case issued in January 2013). To avoid these disparities, PHMSA is applying the date of the exit briefing as the date a case is “initiated.” Although PHMSA is using the exit briefing to represent the initiation of a case, only cases that have been finally-adjudicated will be considered as prior violations. As such, the issuance of an exit briefing alone, with no further action does not constitute a prior violation.

In addition, we are including a specific provision for the use of expired special permits that was previously included in a separate section. Under this provision, if a respondent is cited for operating under an expired special permit and has previously committed the same violation, the penalty will be doubled (i.e., increased by 100 percent). This is the same as the previous language, we are simply relocating it so that all of the factors relating to prior violations are discussed together.

We are also adding one factor that PHMSA will consider in determining penalty increases for prior violations. If PHMSA finds that a respondent has been cited for an identical violation within the six-year period specified above, we will generally increase the penalty for that violation by 100 percent. The rationale for this is that the respondent was previously notified of the violation and had the opportunity to correct it; failing to correct an issue and committing the exact same violation demonstrates a disregard for compliance and justifies an additional increase to the penalty.

With respect to corrective action, the revised guidelines provide additional details regarding how PHMSA determines reductions for corrective action. These revisions supplement, but do not change, the existing standard. Notably, we are including further explanations of the primary factors—extent and timing. We are also adding guidance for how respondents may document their corrective actions. Additionally, we are setting out standards that describe the factors we consider in determining whether to reduce a civil penalty for corrective action, up to 25 percent. Finally, we are incorporating a new provision that respondents who have committed the same violation previously (as determined in a finally-adjudicated case) may not receive a reduction for corrective action because corrective action is warranted when a respondent in an enforcement case makes sincere, comprehensive, and effective efforts to remedy a violation. Therefore, if the company was previously notified of the non-compliance issue and failed to fix it, a corrective action reduction is not appropriate.

We are also revising the provisions for penalty reductions for financial considerations in the guidelines; however, we are not making any substantive changes to this section. We have merely modified and restructured the language, without changing the meaning.

Finally, we are removing the section regarding penalty increases for using an expired special permit. Previously, this section included two provisions: (1) That a prior violation warrants an increase of 25 percent, and (2) that when a respondent uses an expired special permit and has previously committed the same violation, an increase of 100 percent is appropriate. The first provision is adequately expressed in the section on prior violations (i.e., 25 percent increase for a prior violation). And the second provision is now moved to the section on prior violations as well, in order to keep all increases for prior violations in the same section for organizational purposes.

Although these revisions to the guidelines are intended to provide consistency and clarity, the baseline assessments are only the starting point for assessing a penalty for a violation. Because no two cases are identical, rigid use of the guidelines would produce arbitrary results and, most significantly, would ignore the statutory mandate to consider specific assessment criteria set forth in 49 U.S.C. 5123 and 49 CFR 107.331, including consideration of small businesses. Therefore, PHMSA will continue to review all relevant information in the record concerning any alleged violation or the respondent, and we will adjust the baseline assessments as warranted by the statutory criteria.

These penalty guidelines remain subject to revision and PHMSA will use the version of the guidelines in effect at the time the violation in any particular case is committed. Questions concerning PHMSA's penalty guidelines and any comments or suggested revisions may be addressed to the persons identified above, in FOR FURTHER INFORMATION CONTACT.

III. Rulemaking Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

This final rule is published under the authority of the Federal hazardous materials transportation law (49 U.S.C. 5101-5128). Section 5123(a) of that law provides civil penalties for knowing violations of Federal hazardous material transportation law or a regulation, order, special permit, or approval issued under that law. This rule revises PHMSA's guidelines for determining civil penalties, which are published in Appendix A to subpart D of part 107, including the List of Frequently Cited Violations in Part II, as well as Part III Consideration of Statutory Criteria and Part IV Miscellaneous Factors Affecting Penalty Amounts, which provide additional factors and criteria that affect penalty amounts.

Revisions to Part II include modifications to individual baseline assessments, the addition of frequently-cited violations not previously included in the guidelines, and the replacement of penalty ranges with assigned penalties based on safety risks, such as packing group, where appropriate. The revisions to Parts III and IV of the guidelines clarify the criteria PHMSA considers when determining a civil penalty amount that appropriately reflects the risk posed by a violation, the culpability of the respondent, and any aggravating or mitigating factors. More specifically, we are establishing a sequence in which aggravating and mitigating factors are applied, identifying the period within which prior violations are considered, specifying that the repeating of identical violations in multiple cases serves as an aggravating factor, and clarifying the process by which PHMSA considers mitigation for corrective actions, reshippers, and financial considerations as well as penalty increases for multiple counts and prior violations.

Under 49 U.S.C. 5123(c), when determining a civil penalty amount, PHMSA must consider the nature, circumstances, extent, and gravity of the violation, the degree of culpability, history of compliance, ability to pay, and effect on ability to continue to do business for the specific respondent, as well as other matters that justice requires. As such, the baseline penalties in the List of Frequently Cited Violations and the additional factors in Parts III and IV are merely guidelines that are subject to adjustments for the unique facts and circumstances of each case. They do not establish or impose any requirements, are not finally-determinative of any issues or rights, are not binding, and do not have the force of law. Rather, they are guidelines PHMSA uses as a starting point in determining a civil penalty and a guide outlining relevant factors we consider. Since they are merely informational guidelines stating general agency policy and practice, no notice of proposed rulemaking is necessary.

B. Executive Order 13610, Executive Order 13563, Executive Order 12866, and DOT Regulatory Policies and Procedures

This rulemaking is not considered a significant regulatory action under Executive Order 12866 and the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034). Accordingly, this final rule was not reviewed by the Office of Management and Budget (OMB). Further, this rule is not a significant regulatory action under the Regulatory Policies and Procedures of the DOT because it has minimal impact on a significant number of small businesses.

Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review that were established in Executive Order 12866 Regulatory Planning and Review of September 30, 1993. In addition, Executive Order 13563 specifically requires agencies to identify and consider regulatory approaches that reduce burdens and maintain flexibility and consider how to best promote retrospective analysis to modify, streamline, expand, or repeal existing rules that are outmoded, ineffective, insufficient, or excessively burdensome. The revisions to Appendix A to Subpart D of Part 107 are consistent with the intent of Executive Order 13563 as this final rule clarifies the civil penalties process, fosters a greater understanding of the regulations and associated penalties for non-compliance and updates the regulations to more-accurately reflect current economic conditions.

Executive Order 13610 (Identifying and Reducing Regulatory Burdens) reaffirming the goals of Executive Order 13563 (Improving Regulation and Regulatory Review) issued January 18, 2011, and Executive Order 12866 (Regulatory Planning and Review) issued September 30, 1993 directs agencies to prioritize “those initiatives that will produce significant quantifiable monetary savings or significant quantifiable reductions in paperwork burdens while protecting public health, welfare, safety, and our environment.” Executive Order 13610 further instructs agencies to give consideration to the cumulative effects of their regulations, including cumulative burdens, and prioritize reforms that will significantly reduce burdens.

This final rule does not conflict with Executive Order 12866, Executive Order 13563, or DOT Regulatory Policies and Procedures. This rule imposes no new costs upon persons conducting hazardous materials operations in compliance with the requirements of the HMR. Those entities not in compliance with the requirements of the HMR may experience an increased cost based on the penalties levied against them for non-compliance; however, this is an avoidable, variable cost and thus is not considered in any evaluation of the significance of this regulatory action. The amendments in this rule could provide safety benefits (i.e., larger penalties deterring knowing violators). Overall, it is anticipated this rulemaking would be cost neutral.

A summary of the regulatory evaluation used to support the proposals presented in this final rule are discussed below. A copy of the full regulatory evaluation explaining the rationale behind PHMSA's conclusions is available in the docket for this rulemaking.

Regulatory Evaluation

For the regulatory evaluation of this final rule, PHMSA assumes:

• The cost associated with this rulemaking will be imposed on those individuals who are in violation of the requirements of the HMR.
• Updating the guidelines and expanding the list of frequently cited violations will raise awareness of the regulatory requirements and provide a safety benefit.
• PHMSA is raising the baseline penalties for consistency with MAP-21 and to reflect inflation based on the calculation found in the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Act), as amended by the Debt Collection Improvement Act of 1996 (the Act is set forth in the note to 28 U.S.C. 2461).

PHMSA's current civil penalties program has proven effective in achieving a high level of transportation safety. However, the lack of fee increases to keep pace with inflation may have limited the capability to deter potential violators from knowingly violating the HMR. While this final rule maintains the current level of safety, we expect the implementation of the changes published in this final rule will result in a benefit by providing a more substantial deterrent for potential violators of the HMR.

PHMSA anticipates the primary costs will be to those who violate the HMR while the primary benefits will be attributed to an increased awareness of regulatory requirements, an improved understanding of the civil penalties process, and a more substantial deterrent for those who violate the HMR.

C. Executive Order 13132

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (Federalism). This rule does not impose any regulation having substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government; it is merely an updated informational statement of policy and guidance and does not impose any requirements. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

D. Executive Order 13175

This final rule has been 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, and does not preempt tribal law, the funding and consultation requirements of Executive Order 13175 do not apply, and a tribal summary impact statement is not required.

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 the impact on small entities unless the agency determines a rule is not expected to have a significant impact on a substantial number of small entities. If an agency finds that there is a significant impact, the agency must consider whether alternative approaches could mitigate the impact on small entities. The size criteria for small entities are defined by the Small Business Administration (SBA) in 13 CFR 121.201.

The hazardous materials regulated community consists of approximately 200,000 offerors. Approximately 90 percent meet the SBA small business criteria. However, we have determined that, based on the following analysis, the changes adopted in the final rule will not result in a significant impact. Based on our review of PHMSA hazardous materials penalties levied in the last calendar year (January 1, 2012-December 31, 2012), PHMSA issued 616 cases and tickets. If we used the assumption that 90 percent of the hazardous materials regulated community meet the SBA small business criteria than this final rule would only affect approximately 550 small entities. Therefore, PHMSA certifies this rule would not have a significant economic impact on a substantial number of small entities.

F. Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995, no person is required to respond to an information collection unless it has been approved by OMB and displays a valid OMB control number. Section 1320.8(d) of Title 5 of the Code of Federal Regulations requires that PHMSA provide interested members of the public and affected agencies an opportunity to comment on information and recordkeeping requests. There are no new information requirements in this final rule.

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 spring and fall of each year. The RIN contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.

H. Unfunded Mandates Reform Act 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, in the aggregate, to any of the following: state, local, or Native American tribal governments, or to the private sector.

I. Environmental Assessment

The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. §§ 4321-4375), requires Federal agencies to consider the consequences of major federal actions and prepare a detailed statement on actions significantly affecting the quality of the human environment. When developing potential regulatory requirements, PHMSA evaluates those requirements to consider the environmental impact of each amendment. Specifically, the Council on Environmental Quality (CEQ) regulations require federal agencies to conduct an environmental review considering: (1) The need for the proposed action; (2) alternatives to the proposed action; (3) probable environmental impacts of the proposed action and alternatives; and (4) the agencies and persons consulted during the consideration process.

Description of Action

In this final rule we are revising 49 CFR Appendix A to Subpart D of Part 107 (Enforcement) Part II by:

• Modifying individual baseline assessments contained in the penalty guidelines table;
• Adding violations not previously included in the list of frequently-cited violations; and
• Replacing penalty ranges with assigned penalties based on safety risks, such as packing group, where appropriate.

In addition in this final rule we are revising 49 CFR Appendix A to Subpart D of Part 107, Part III—Consideration of Statutory Criteria and Part IV—Miscellaneous Factors Affecting Penalty Amounts by:

• Establishing a penalty amount that appropriately addresses the risk posed by a violation; and
• Establishing the criteria and PHMSA's process for considering the statutorily-mandated aggravating or mitigating factors involved in determining a civil penalty.

Alternatives Considered

Alternative (1)—No action alternative: Leave the HMR as is; do not adopt above-described guidelines.

PHMSA periodically reviews and updates various regulations and guidelines to improve the clarity of the HMR and provide relief for safe alternatives when necessary. If PHMSA chose the no-action alternative, the public would not receive the benefits of increased awareness of the civil penalties and the processes that accompany them. Furthermore, PHMSA civil penalties would continue to be out of date and not reflective of current economic conditions. Therefore, PHMSA rejected the do-nothing alternative.

Alternative (2)—Preferred Alternative: Go forward with the modified guidelines as described in this notice.

Environmental Consequences

Under the HMR, hazardous materials are transported by aircraft, vessel, rail, and highway. The potential for environmental damage or contamination exists when packages of hazardous materials are involved in accidents or en route incidents resulting from cargo shifts, valve failures, package failures, loading, unloading, collisions, handling problems, or deliberate sabotage. The release of hazardous materials can cause human death or injury, the loss of ecological resources (e.g. wildlife habitats), and the contamination of air, aquatic environments, and soil. Contamination of soil can lead to the contamination of ground water. Compliance with the HMR substantially reduces the possibility of accidental release of hazardous materials.

When developing potential regulatory requirements, PHMSA evaluates those requirements to consider the environmental impact of each amendment. Specifically, PHMSA evaluates: The risk of release and resulting environmental impact; risk to human safety, including any risk to first responders; longevity of the packaging; and if the proposed regulation would be carried out in a defined geographic area, the resources, especially any sensitive areas, and how they could be impacted by any proposed regulations. As the civil penalty program is specifically designed to ensure compliance with the HMR it concurrently reduces the possibility of accidental release of hazardous materials and thus environmental damage.

Conclusion

Based on the above discussion, the amendments in this final rule would have no significant negative environmental impacts. Civil penalties may act as a deterrent to those violating the HMR, which may have a negligible positive environmental impact as a result of increased compliance with the HMR. PHMSA concludes there are no significant environmental impacts associated with this final rule.

J. Privacy Act

Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comments (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) which may be viewed at http://www.dot.gov/privacy.

K. Executive Order 13609 and International Trade Analysis

Under Executive Order 13609, agencies must consider whether the impacts associated with significant variations between domestic and international regulatory approaches are unnecessary or may impair the ability of American business to export and compete internationally. In meeting shared challenges involving health, safety, labor, security, environmental, and other issues, international regulatory cooperation can identify approaches that are at least as protective as those that are or would be adopted in the absence of such cooperation. International regulatory cooperation can also reduce, eliminate, or prevent unnecessary differences in regulatory requirements.

Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. For purposes of these requirements, Federal agencies may participate in the establishment of international standards, so long as the standards have a legitimate domestic objective, such as providing for safety, and do not operate to exclude imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.

PHMSA participates in the establishment of international standards in order to protect the safety of the American public, and we have assessed the effects of the final rule to ensure that it does not cause unnecessary obstacles to foreign trade. Accordingly, this rulemaking is consistent with Executive Order 13609 and PHMSA's obligations.

L. National Technology Transfer and Advancement Act

The National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) directs federal agencies to use voluntary consensus standards in their regulatory activities unless doing so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specification of materials, test methods, or performance requirements) that are developed or adopted by voluntary consensus standard bodies. There are no voluntary consensus standards relevant to the penalty guidelines, and as such, the revised guidelines do not include any.

IV. Revised Appendix A to Subpart D of Part 107—Guidelines for Civil Penalties

List of Subjects in 49 CFR Part 107

Administrative practices and procedure, Hazardous materials transportation, Packaging and containers, Penalties, Reporting and recordkeeping requirements.