RE: Petition for Rulemaking Hazardous Materials Safety Permits 1

December 2, 2005 The safety and security association of the commercial explosives industry h Founded 1913 Annette Sandberg Administrator Federal Motor Carriers Safety Administration US Department of Transportation 400 Seventh St., SW Washington, DC 20590 Dear Administrator Sandberg: RE: Petition for Rulemaking Hazardous Materials Safety Permits 1 Pursuant to 49 CFR 389.31, I am petitioning, on behalf of the Institute of Makers of Explosives (IME), for a rulemaking to address issues identified through the implementation of the Federal Motor Carrier Safety Administration s (FMCSA) new hazardous materials safety permit. Interest of the Petitioner The IME is the safety and security association of the commercial explosives industry. Our mission is to promote safety, security and the protection of employees, users, the public and the environment; and to encourage the adoption of uniform rules and regulations in the manufacture, transportation, storage, handling, use and disposal of explosive materials used in blasting and other essential operations. Commercial explosives are transported primarily by motor vehicle and used in every state. The ability to transport and distribute these products safely and securely is critical to this industry. We are concerned that absent revision of rules governing the determination of motor carrier fitness to transport certain hazardous materials that the universe of qualified carriers will be unduly restricted without appreciably enhancing safety or security. It is a misnomer to call the safety permit a hazardous materials safety permit. Of the hundreds of materials regulated by DOT as hazardous only a handful are subject by statute to the permit requirement. In reality, the hazmat safety permit only affects motor carriers of certain explosives and to a lesser extent TIH materials. Virtually all commercial finished explosives billions of pounds annually in the divisions subject to the safety permit moves by truck, usually short- 1 49 CFR 385 Subpart E. 1120 Nineteenth Street, N.W., Suite 310, Washington, DC 20036-3605, Tel: (202) 429-9280

2 haul, private motor carriage. (This volume does not include pyrotechnics.) The impact of the safety permit rules on the explosives industry is enormous. Issues The issues we raise below are a summation of the points we raised at a meeting with FMCSA on this subject. 2 As a result of that meeting, we agreed to submit our concerns as a petition for rulemaking. Our petition seeking to reform the current measures and process for determining the qualification of a motor carrier to transport certain hazardous materials should not be interpreted as a lack of commitment to the improvement of motor carrier safety and security. Neither should our petition for reform be seen as an effort to undermine DOT enforcement powers, including imminent hazard authority, which can be used to terminate carrier operations when conditions pose extreme immediate risk to safety and/or security. Rather, these issues point out discriminatory effects resulting from aspects of the hazmat permit assessment program. These discriminatory effects will be more acutely felt by small business, will unduly increase the difficulty of finding carriers to transport covered commodities, and will lead to unjustified burdens on the economy. 1. The program is discriminatory in its initial sliding two-year implementation: The requirement for application for the permit falls within a two year period. It is dependent on the carrier s last application for the census (form MCS 150, now 150A). Carriers that were required to file in January 2005 had no time to work on correcting past errors to improve its performance. Those that had had there census form renewed prior to January 2005 had two years to improve performance. 2. The program provided carriers no transition time to better good operations: Carriers involved in the transportation of placarded quantities of hazardous materials, including those covered by the permit, had to maintain operations that would prevent them from receiving an unsatisfactory safety rating. In January 2005, those carriers who intended to transport hazmats subject to the permit needed to maintain a satisfactory safety rating. We support this enhancement. However, the final rule established a floating standard tied to a carrier s accident and out-of-service (OOS) violations that trumps the satisfactory safety rating qualifier, and is now recognized as the key determinant as to whether a safety permit is issued or not. Heretofore, there was no significant penalty in the past for specific levels of activity unless a carrier was flagged because of poor performance. Suspect carriers then had a right to receive a DOT review to see if compliance had been improved prior to losing hazmat operating authority. 3 In short, there was no immediate consequence to hazmat carriers who were better than average, and then, if problems arose, the carrier was given latitude to immediately rectify operational deficiencies to continue business operations. Now, to rehabilitate a carrier disqualified by the floating crash and OOS rates, a carrier needs a window of time to demonstrate by experience that it is better. A situation further complicated by the two-year floating rates and the relatively short time that a carrier has to assess its standing, 2 3 September 21, 2005, Washington, DC. 49 U.S.C. 31144(d)(3).

3 especially if the carrier s renewal occurs within a short time of the new rates being announced. As was the case with the kick-off of this program, carriers who believed that they were in a good position actually had no means of determining where they stood until the program was in effect. 3. The floating worst 30 percent crash/oos disqualifier has the potential to eliminate more than 30 percent of currently qualified carriers from transporting hazardous materials subject to the permit: If a single category of OOS is considered, it may be accurate to describe the effect of the rule as eliminating only the worst 30 percent of carriers. However, only hazardous material carriers will receive a hazmat OOS. Thus, the worst 30 percent of hazmat carriers will be precluded from hauling the restricted hazmat. In addition, it is likely that some hazmat carriers ranking above the 30 percent threshold will fail in one of the other categories of OOS or accident ratio. The net result is that more than 30 percent of hazmat carriers will be denied permits. In a small sampling of the explosives industry, six out of 20 (30%) would be precluded for hazmat OOS, and another three would be precluded for other categories. This is a total of 9 out of 20, a 45 percent level, 50 percent above what the DOT envisioned. 4. The floating worst 30 percent standard is not a consistent measure of what is safe, and it introduces needless and harmful uncertainty into this segment of the economy: The floating standard will change every two years, based on the ratio of inspections to inspections with violations. Currently the hazmat level is 5.88 percent. A carrier that qualifies for a permit with a rating of 5.60 percent, for example (assuming all other categories are acceptable), will, in two years, be denied that permit if the hazmat level has decreased to 5.40 percent even though the carrier maintained the same level of performance. There is no logic in a system that rates a carrier not a safety risk for two years, and though the carrier maintains that same safety performance, it suddenly becomes a safety risk. Over time the biennial sweep of unqualified carriers will have the effect of ratcheting down what is an acceptable level of performance. By extrapolation, DOT could reach a point where the average falls to 1.00 percent and, under this scenario, rather than praising this carrier community, the Department would still penalize the worst 30 percent. This outcome is not defensible. A carrier s qualification to transport permitted hazmats should derive from a fixed standard based on safety, not averages. DOT has an obligation to determine and fix such a standard. 5. The statistical significance of the analysis is flawed: Although the floating standards are based on thousands of inspections and inspections with OOS violations, the application to an individual carrier may be based on a statistically insignificant number of inspections. DOT has stated that a single incident is not statistically significant; therefore it will not be used in a compilation of a carrier s rating in any of the categories. But, the second accident has far greater consequences for a small carrier than a large one where the law of averages will provide a statistical advantage. A carrier that has as few as five transport units may receive less than ten inspections per year. If the carrier has two inspections with OOS violations out of a total of ten inspections during the year, the carrier will not be issued a permit. If that carrier had received no violations in the three years preceding the last 12 months, with an average of ten per year, that safety performance would have counted for nothing. Assuming ten inspections per year, over the past four years, with only two OOS in the last 12 months and

4 none in the first three years, the rate for the carrier would be 5.0 percent for that time period. Statistically, a more relevant indicator of the worthiness of the carrier is the prior four-year period, not the immediate 12 months, especially given the extreme penalty shutting down a business attached to DOT s standard. 6. The determination of when DOT will initiate the processing of permit applications and the 12-month review is arbitrary and thus flawed: If a carrier files an application through the MCS 150B for a permit, there is no certainty about when DOT will begin to process that application. DOT s processing timetable appears to be driven by workload and when the carrier s registration is due to expire. However, the arbitrary nature of the processing timetable is potentially discriminatory. A carrier, who would qualify the day the application is filed, may not, if during the intervening time that FMCSA holds the application without processing, the carrier obtains a disqualifying OOS. Since, there is no specific provision to automatically or immediately revoke of suspend a safety permit if a carrier subsequently exceeds the OOS rate after issuance 4, the carrier whose application is processed in a timely fashion has a material advantage over a carrier whose application is held for some period of time. DOT should establish processing timetables and policy that treat all carriers the same. 7. Inspection criteria are flawed: OOS violations are issued by roadside inspectors. Although there are general guidelines, it is up to the discretion of the inspector whether or not to issue an OOS. In many instances, what one inspector would see as a violation worthy to receive an OOS, another may not. A FMCSA representative s statement that it will all average out in the long run has little solace to the smaller carrier who has few inspections to balance out the average in a 12 month period 8. The accident ratio is flawed: The criteria for an accident have no bearing on the safety worthiness of a carrier. Accidents are based on recordable accidents and have no relationship to fault. Again, a carrier with few vehicles has a much greater possibility of exceeding the standard based on the averages. DOT should consider an accident s preventability given the penalty involved. FMCSA currently analyzes accident preventability when a motor carrier contests its safety rating. 5 FMCSA should not abandon the concept of preventability when calculation the crash rate of a carrier for purposed of the hazmat permit program. Recommendations We recommend the following: 1. Applications on form MCS 150B be acted upon based on the date of receipt by the FMCSA. (See #6) 2. A three-year or 100 inspection/accident period, whichever is greater in time, be used for the violation review, not 12 months. This will result in a more statistically significant number on which to base a judgment. (See #5) 4 5 49 CFR 385.421(a). 49 CFR 385.337, Appendix B to Part 385 Explanation of Safety Rating Process.

5 3. A standard be set based on a study establishing a safe operation, opposed to a fluctuating standard based on the worst 30 percent. (See #4) In the meantime, FMSCA could consider a standard that a carrier would have to fall below the 30 percent threshold in at least two OOS or crash rate categories. 4. Rather than simply denying the permit if the percentage standards are not met, a more reasonable approach may be as follows. A carrier not meeting a standard upon application would be immediately in a Probation Period category. A full compliance review of the carrier by DOT would be required within one month unless the application was withdrawn. If a satisfactory rating is not subsequently received by the carrier, the permit would then be denied. This approach seems consistent with FMCSA s articulation of conditions for issuing a safety permit published in the preamble to the final rule, Motor carriers must have a Satisfactory safety rating in order to obtain a safety permit. In addition, until we complete a compliance review, FMCSA will not issue a safety permit to a motor carrier that has, as indicated in the agency s Motor Carrier Management Information System, a crash rate in the top 30 percent of the national average, or a driver, vehicle, hazardous materials, or total out-of-service rate in the top 30 percent of the national average. 6 (Emphasis added.) Regulatory changes recommended by IME to begin to address these issues follow as an attachment. Conclusion Too much is riding on the livelihood of carriers of explosives to have such an onerous and poorly measurable regulation on the books. We see no statistical information to show these carriers of explosives as a great risk transport risk to the public. We believe our petition to for reform is reasonable, more equitable, will not undermine safety or security, and will lend more stability in the motor carrier community which transports affected commodities. We would be happy to discuss further any of the issues, concepts, or recommendations presented above. We understand that other petitions for reform in this area are pending at the agency. We have no objection to grouping these petitions if it is the most expeditious means to reform the means by which motor carriers are deemed qualified to transport certain hazardous materials. Thank you for your attention to this petition Respectfully, Cynthia Hilton Executive Vice President Attachment 6 69 FR 39352 (June 30, 2004).

6 Text of the Rule Pursuant to 49 CFR 389.31(b)(2), the following regulation is the subject of this petition. Proposed additions are designated by underline. [Code of Federal Regulations] [Title 49, Volume 4] [Revised as of October 1, 2004] From the U.S. Government Printing Office via GPO Access [CITE: 49CFR385.407] TITLE 49--TRANSPORTATION DEPARTMENT OF TRANSPORTATION PART 385_SAFETY FITNESS PROCEDURES--Table of Contents Subpart E Hazardous Materials Safety Permits *** Sec. 385.407 What conditions must a motor carrier satisfy for FMCSA to issue a safety permit? (a) Motor carrier safety performance. (1) The motor carrier must have a Satisfactory safety rating assigned by either FMCSA, pursuant to the Safety Fitness Procedures of this part, or the State in which the motor carrier has its principal place of business, if the State has adopted and implemented safety fitness procedures that are equivalent to the procedures in subpart A of this part; and, (2) Except as provided in paragraph (3), FMCSA will not issue a safety permit to a motor carrier that: (i) Does not certify that it has a satisfactory security program as required in Sec. 385.407(b); (ii) Has a crash rate in the top 30 percent of the national average as indicated in the FMCSA Motor Carrier Management Information System (MCMIS) after adjusting for accident preventability; or (iii) Has, in at least two categories, a driver, vehicle, hazardous materials, or total out-ofservice rate in the top 30 percent of the national average as indicated in the MCMIS. (3) FMCSA will conduct a compliance review of a motor carrier deemed ineligible to received a safety permit for failure to meet the conditions specified in paragraph (2)(ii) and (2)(iii) unless the carrier withdraws its Form MCS-150B application. (i) The ineligible carrier shall immediately be placed in probation for a period of 30 days during which time the carrier may continue to transport materials listed in Sec. 385.403; and (ii) FMCSA will conduct the compliance review within 30 days or extend the probationary period. (4) If, as a result of the compliance review conducted pursuant to paragraph (3), the ineligible carrier is determined to

(i) have a Satisfactory safety rating as required by paragraph (1), the carrier shall be issued a safety permit; or (ii) not have a Satisfactory safety rating as required by paragraph (1), the carrier shall (A) immediately forfeit its probationary status; (B) not be issued a safety permit; and (C) be eligible to exercise its right to an administrative review pursuant to Sec. 385.423. 7