# Hazardous Materials; Transportation of Lithium Batteries

- **operation:** document
- **citation:** 70 FR 34729
- **title:** Hazardous Materials; Transportation of Lithium Batteries
- **source type:** rulemaking
- **agency:** Pipeline and Hazardous Materials Safety Administration
- **status:** proposed
- **official:** true
- **published on:** 2005-06-15
- **effective on:** Not available
- **summary:** The Pipeline and Hazardous Materials Safety Administration (PHMSA) is publishing this initial regulatory flexibility analysis to aid the public in commenting upon the potential small business impacts of the proposals in our April 2, 2002 notice of proposed rulemaking to amend the requirements in the Hazardous Materials Regulations (HMR) on: (1) Exceptions for "small" and for "mid-size" batteries (i.e., cells up to 5 grams of lithium content and batteries up to 25 grams of lithium content); and (2) exceptions for aircraft passengers and crew. These changes are being proposed in order to clarify requirements to promote safer transportation practices; promote compliance and enforcement; eliminate unnecessary regulatory requirements; facilitate international commerce; and make these requirements easier to understand. We will consider comments received to improve our regulatory flexibility analysis and in making our decision on a final rule.
- **machine formats:** - **json:** https://regulus.evalyn.ai/document/federal-register-05-11765.json
- **markdown:** https://regulus.evalyn.ai/document/federal-register-05-11765.md
- **app url:** https://regulus.evalyn.ai/document/federal-register-05-11765
- **source url:** https://www.federalregister.gov/documents/2005/06/15/05-11765/hazardous-materials-transportation-of-lithium-batteries
**body:**

Federal Register, Volume 70 Issue 114 (Wednesday, June 15, 2005) [Federal Register Volume 70, Number 114 (Wednesday, June 15, 2005)] [Proposed Rules] [Pages 34729-34740] From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ] [FR Doc No: 05-11765] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration 49 CFR Parts 171, 172, 173, and 175 [Docket No. PHMSA-02-11989 (HM-224C)] RIN 2137-AD48 Hazardous Materials; Transportation of Lithium Batteries AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT. ACTION: Initial regulatory flexibility analysis. ----------------------------------------------------------------------- SUMMARY: The Pipeline and Hazardous Materials Safety Administration (PHMSA) is publishing this initial regulatory flexibility analysis to aid the public in commenting upon the potential small business impacts of the proposals in our April 2, 2002 notice of proposed rulemaking to amend the requirements in the Hazardous Materials Regulations (HMR) on: (1) Exceptions for ``small'' and for ``mid-size'' batteries (i.e., cells up to 5 grams of lithium content and batteries up to 25 grams of lithium content); and (2) exceptions for aircraft passengers and crew. These changes are being proposed in order to clarify requirements to promote safer transportation practices; promote compliance and enforcement; eliminate unnecessary regulatory requirements; facilitate international commerce; and make these requirements easier to understand. We will consider comments received to improve our regulatory flexibility analysis and in making our decision on a final rule. DATES: Written comments must be received on or before August 1, 2005. ADDRESSES: You may submit comments (identified by DOT DMS Docket Number PHMSA-02-11989 (HM-224C)) by any of the following methods: Web site: http://dms.dot.gov . Follow the instructions for submitting comments on the DOT electronic docket site. Fax: 202-493-2251. Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, PL-401, Washington, DC 20590-0001. Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Federal eRulemaking Portal: Go to http://www.regulations.gov . Follow the online instructions for submitting comments. Instructions: You must include the agency name (Pipeline and Hazardous Materials Safety Administration) and the Docket number (PHMSA-02-11989 (HM-224C)) or the Regulatory Identification Number (RIN 2137-AD48) for this rulemaking at the beginning of your comments. You should submit two copies of your comments if you submit them by mail. If you wish to receive confirmation that PHMSA received your comments, you must include a self-addressed stamped postcard. Note that all comments received will be posted, without change, to http://dms.dot.gov including any personal information provided and will be available to internet users. Please see the Privacy Act section of this document. Docket: For access to the docket to read background documents and comments received, go to http://dms.dot.gov at any time or to Room PL- 401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: John Gale, Office of Hazardous Materials Standards, PHMSA, Department of Transportation, 400 Seventh St., SW., Washington, DC 20590-0001, Telephone (202) 366-8553. SUPPLEMENTARY INFORMATION: In our April 2, 2002 notice of proposed rulemaking (NPRM) under this docket (67 FR 15510), the Research and Special Programs Administration (RSPA)--PHMSA's predecessor agency-- explained that lithium batteries and equipment containing or packed with lithium batteries are regulated as Class 9 materials unless they meet an exception in the Hazardous materials Regulations (HMR, 49 CFR Parts 171-180). In that NPRM, RSPA proposed (1) changes to test methods for lithium batteries, (2) that excepted ``small'' batteries must be tested and each package containing more than 24 cells or 12 batteries must meet packaging standards, including a maximum gross mass, and have certain communication of the hazards (marking and accompanying documentation), (3) elimination of the exception for ``mid-size'' cells and batteries, and (4) exceptions for airline passengers and crew members to carry consumer electronic devices and spare batteries aboard aircraft, subject to limits on the lithium content and number of spare batteries. Our April 2, 2002 NPRM did not include an initial regulatory flexibility analysis (IRFA) pursuant to the Regulatory Flexibility Act (5 U.S.C. 603) [[Page 34730]] because we concluded that the proposed changes would not have a significant economic impact on a substantial number of small entities (5 U.S.C. 605). We concluded that the costs associated with testing ``small'' lithium batteries would be incurred by lithium battery manufacturers, which are not small businesses. We also concluded that most small businesses that offer lithium batteries for transportation would make smaller shipments (fewer than 24 cells or 12 batteries) of ``small'' batteries and would not have to meet the packaging and hazard communication requirements. Comments to the proposed rule indicated that some lithium battery manufacturers are small businesses and that the small shipment exception may not sufficiently mitigate their burden. On August 22, 2003, the Office of Management and Budget returned RSPA's draft final rule in this proceeding stating that, after discussions with the Small Business Administration, it believed that a full IRFA should be prepared containing ``additional information that will allow RSPA to more fully address comments disputing the need for regulating lithium ion batteries,'' with ``as much detail as possible on their cost estimates,'' and also to ``gather additional information on the number of small businesses impacted and their annual revenues.'' Thereafter, RSPA performed a threshold analysis and determined that at least 52 small businesses could be affected by the proposed rule and that this number could increase as the market for lithium batteries and cells increases. Based on the threshold analysis we concluded that this IRFA was required because the proposed rule may have significant economic impact on a substantial number of small businesses. In an interim final rule (IFR) published December 15, 2004, under Docket No. PHMSA-04-19886 (HM-224E, 69 FR 75208), we amended the HMR to (1) prohibit the transportation of primary (non-rechargeable) lithium batteries and cells as cargo aboard passenger-carrying aircraft, (2) adopt conditions under which equipment containing or packed with primary lithium batteries and cells may be transported aboard passenger-carrying aircraft, and (3) require that packages of small and mid-size primary lithium batteries and cells (that are excepted from Class 9) must be marked ``Primary Lithium Batteries--Forbidden for Transport Aboard Passenger Aircraft'' when transported by highway, rail, vessel, or cargo aircraft. The IFR also provides that lithium batteries are not eligible for the ``small quantity'' exception in 49 CFR 173.4, but that airline passengers and crew members may carry consumer electronic and medical devices containing lithium cells or batteries, and spare batteries, in their carry-on or checked baggage, up to a maximum lithium content of each cell and each battery. The prohibition and restrictions adopted in this IFR apply to both foreign and domestic passenger-carrying aircraft entering, leaving, or operating in the United States and to persons offering primary lithium batteries and cells for transportation on any passenger-carrying aircraft. Aside the exception for electronic devices and spare batteries in airline passenger and crew member baggage, the provisions adopted in the IFR do not apply to secondary (rechargeable) lithium batteries (e.g., lithium ion batteries). In a separate rulemaking proceeding, the revised UN test methods for lithium batteries were adopted in the HMR. Docket No. PHMSA-04- 17036 (HM-215G), 69 FR 76043 (Dec. 20, 2004). For these reasons, this IRFA does not address the changes proposed in the April 2, 2002 NPRM concerning test methods or the exception for electronic devices. Description of the reasons that action by the agency is being considered. PHMSA believes that the current regulations pertaining to the transportation of lithium batteries and cells are insufficient to prevent potentially serious incidents resulting from damage to these batteries and cells. The potential for fires that are difficult to extinguish from such incidents was discussed in the preamble to the proposed rule, which described two fires involving lithium batteries (67 FR 15511). Changes to the international regulations concerning the transportation of lithium batteries and cells, particularly the United Nations Recommendations on the Transport of Dangerous Goods (UN Recommendations), were adopted to address these safety issues. As a result, the HMR is now inconsistent with the UN Recommendations and, thus, makes it more difficult to transport these materials in international commerce. Succinct statement of the objectives of, and legal basis for, the proposed rule. The proposed rule will improve the safety of transportation of lithium batteries and cells by changing the test methods for lithium batteries, revising the exceptions for small batteries, eliminating an exception for larger batteries, adding exceptions for aircraft passengers and crew, and making editorial changes to clarify the requirements. To further clarify and describe these changes, we have proposed to define small, mid-size, and large categories for lithium batteries and cells, as shown in Table 1, where Li means Lithium and ELC means equivalent lithium content. Equivalent lithium content means, for a lithium ion cell, the product of the rated capacity, in ampere-hours, of a lithium ion cell times 0.3. The equivalent lithium content of a battery equals the sum of the grams of equivalent lithium contents contained in the component cells of the battery. Table 1.--Battery and Cell Category Definitions ---------------------------------------------------------------------------------------------------------------- Small (no more than) Mid-size (between) Large (more than) ---------------------------------------------------------------------------------------------------------------- Cells: Lithium Metal/Alloy............ 1 g Li 1 g and 5 g Li 5 gLi Lithium Ion.................... 1.5 g ELC 1.5 g and 5 g ELC 5 g ELC Batteries: Lithium Metal/Alloy............ 2 g Li 2 g and 25 g Li 25 g Li Lithium Ion.................... 8 g ELC 8 g and 25 g ELC 25 g ELC ---------------------------------------------------------------------------------------------------------------- This IRFA considers the following specific changes to the HMR: 1. Revise the exception for small batteries. a. Require testing of small batteries formerly excepted under the HMR [[Page 34731]] according to the UN Manual of Tests and Criteria. b. When a package contains more than 24 cells or 12 batteries, except when installed in equipment, small batteries must meet the following packaging and shipping requirements: The package must be marked to indicate that it contains lithium batteries, and that special procedures should be followed in the event that the package is damaged; The package must be accompanied by a document indicating that the package contains lithium batteries and that special procedures should be followed in the event that the package is damaged; The package must be capable of withstanding a 1.2 meter drop test in any orientation without damage to cells or batteries contained in the package, without shifting of the contents that would allow short circuiting and without release of package contents; and Except in the case of lithium cells or batteries packed with or contained in equipment, in packages not exceeding 30 kilograms (gross weight). 2. Remove the exception associated with the shipment of mid-size batteries, so that these batteries and cells must be shipped as Class 9 hazardous materials. The requirement to transport mid-size batteries and cells as Class 9 hazardous materials will not subject the batteries to any additional testing; however, employees who are involved with any aspect of their transportation (including preparing shipping papers) would be now considered hazmat employees and would be subject to the applicable training requirements under the HMR. Additionally, these shipments would have to be made in UN performance-oriented packagings and marked, labeled, and described on shipping papers in accordance with the HMR. 3. Except from the HMR consumer electronic devices (watches, calculating machines, cameras, cellular phones, lap-top computers, camcorders, etc.) brought onboard an aircraft by passengers and crew. Also except from the HMR passengers and crew carrying spare batteries for consumer electronic devices containing lithium or lithium ion cells or batteries subject to quantity and lithium content limits when carried by passengers or crew member for personal use. Each spare battery must be individually protected so as to prevent short circuits and carried in carry-on baggage only. In addition, each spare battery must not exceed the following: (i) For a lithium metal or lithium alloy battery, a lithium content of not more than 2 grams per battery; or (ii) For a lithium ion battery, an aggregate equivalent lithium content of not more than 8 grams per battery, except that up to two batteries with an aggregate equivalent lithium content of more than 8 grams but not more than 25 grams may be carried. These changes are summarized in Table 2. Table 2.--Summary of Requirements by Battery and Cell Category ------------------------------------------------------------------------ Small Mid-size Large ------------------------------------------------------------------------ Testing............. Will be subject No change...... ................ to UN Testing requirements. Shipping............ Packages of Now subject to No change. more than 24 HMR as Class 9 cells or 12 (only required batteries old UN Tests (except when before). installed in equipment) have new integrity and communication requirements. Revise exceptions for passengers and crew for carrying consumer electronic devices and spare batteries ------------------------------------------------------------------------ Description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply. In recent years, the lithium battery industry has undergone a transformation from one serving a small, niche-driven market to a rapidly growing industry powering equipment in a broad range of sectors (e.g., military, manufacturing and medical), and being used in a variety of consumer electronics, including: laptop computers, communications equipment, and entertainment products. Primary or non- chargeable batteries are used to power a number of electronics and other high-tech products, including digital cameras, memory backup circuits, security devices, calculators, and watches. Rechargeable or secondary lithium ion batteries are used in laptop computers, camcorders, cell phones, and other portable electronic devices. The proposed rule would regulate the transportation of primary and secondary lithium batteries and cells. For this analysis, we identified 109 businesses potentially affected by the proposed rule. Of these 109 businesses, 60 were identified as small businesses based on the size standards developed by the Small Business Administration and codified in 13 CFR 121.201. These small businesses were identified using a number of sources: 1. Energy source guides at http://energy.sourceguides.com/businesses/byP/batP/batt/btora/bType/lion/byB/mfg/byN/byName.shtml and http://energy.sourceguides.com /businesses/byP/batP/batt/byB/mfg/byN/ byNameWeb.shtml 2. Batteries EZ Search at http://www.industrialbatteries-ez.com/industrialbatteries/0028713_0028679_1.html 3. Portable Rechargeable Battery Assocation (PRBA) Member List at http://www.prba.org/member.html 4. Lexis-Nexis search ``manufactures lithium batteries'' 5. Thomas Register at http://www.thomasregister.com/ 6. Dun & Bradstreet financial and other reports (through Westlaw) 7. Dun & Bradstreet financial and other reports (through Electronics Business on-line) 8. Hoover's company database 9. Information Access company database 10. Reference USA 11. US business directory 12. Disclosure incorporated database 13. PR newswire 14. Mergent Inc. reports 15. Investext group 16. Corporate websites Table 3 presents the number of small businesses impacted by the proposed rule for each industry. [[Page 34732]] Table 3.--Number of Impacted Small Businesses by NAICS Code ------------------------------------------------------------------------ Number of Industries NAICS code small businesses ------------------------------------------------------------------------ Bare Printed Circuit Board Manufacturing 334412 1 Other Electronic Component Manufacturing 334419 3 Electromedical and Electrotherapeutic 334510 1 Apparatus Manufacturing................ Other Lighting Equipment Manufacturing.. 335129 1 Storage Battery Manufacturing........... 335911 21 Primary Battery Manufacturing........... 335912 8 All Other Miscellaneous Electrical 335999 7 Equipment and Component Manufacturing.. Surgical and Medical Instrument 339112 2 Manufacturing.......................... Surgical Appliance and Supplies 339113 1 Manufacturing.......................... Electrical Apparatus and Equipment, 423610 8 Wiring Supplies, and Related Equipment Merchant Wholesalers................... Other Electronic Parts and Equipment 423690 4 Merchant Wholesalers................... Industrial Supplies Merchant Wholesalers 423840 1 Research and Development in the 541710 2 Physical, Engineering, and Life Sciences............................... ----------------- Total............................... .............. 60 ------------------------------------------------------------------------ Approximately one-third of all small businesses identified are in NAICS 335911, Storage Battery Manufacturing. Primary Battery Manufacturing, NAICS 335912, is among the next largest categories of small businesses. Most of the businesses in these two categories are likely to have a significant portion of their business related to lithium-based products. Two of the firms that were contacted indicated that the lithium battery/cell business was a very small component of their overall business and that, while they have entered that market in anticipation of its growth, they would abandon the lithium battery/cell market if the compliance costs increased significantly. Many of the small businesses identified in this IRFA both manufacture battery packs and distribute batteries manufactured by other companies. A total of 24 companies (40 percent) both manufacture and distribute battery packs. Battery manufacturing, as applied in this context, entails the packaging or assemblage of cells manufactured primarily from foreign sources into custom packs designed to meet specific customer demands. Of the 60 small business identified, 18 (30 percent) only manufacture batteries and 18 (30 percent) exclusively distribute batteries manufactured by other companies. We believed that electronic equipment distributors would also be impacted by this proposed rule and contacted the Electronic Industries Alliance. However, they indicated that their industry is comprised primarily of large businesses. The many of the small businesses impacted by this analysis described themselves as ``value-added'' businesses offering custom- designed batteries at relatively low-volumes to long-time military, medical, original equipment manufacturers (OEMs) and high-tech customers. Typically, the small businesses were purchasing cells from foreign sources and assembling them into packs for customers. Batteries offered by these small businesses tend to be more complex with higher quality and reliability standards, according to the respondents. These small businesses also develop computer and other consumer electronic batteries for ``after-market'' sales. Table 4 stratifies the small businesses according to annual revenue. The annual revenue of the 60 small businesses identified for this examination totals roughly $681 million annually. There were nine small businesses contacted to examine the potential impact of the proposed rule on their operations. The annual revenue of these nine businesses impacted by the NPRM totals approximately $217.1 million, or 31.9 percent of the total. Annual revenues among all 60 small businesses range from a low of $100,000 to a high of $98.7 million. As shown, 47 percent of the small businesses generate less than $5 million in annual revenue, while 65 percent generate less than $10 million. Of the nine small businesses contacted, the sales-weighted before-tax profit margin was approximately 21 percent. Applying the 21 percent before-tax profit margin to the annual revenue estimates noted previously generates an estimated $145 million of before-tax profit for the small businesses affected by the proposed rule. Among the small businesses examined in this IRFA, the average before-tax profit is, therefore, estimated at $2.4 million annually. Note, however, that these businesses do not focus entirely on the manufacturing and distribution of lithium batteries. Thus, only a fraction of these profits are attributable to lithium batteries. Table 4.--Small Business Size by Annual Sales ---------------------------------------------------------------------------------------------------------------- Number of Percentage of Annual sales small small Cumulative businesses businesses percentage ---------------------------------------------------------------------------------------------------------------- 0-499,999....................................................... 4 7 7 500,000-999,999................................................. 3 5 12 1,000,000-4,999,999............................................. 20 35 47 5,000,000-9,999,999............................................. 10 18 65 10,000,000-14,999,999........................................... 3 5 70 15,000,000-19,999,999........................................... 8 14 84 20,000,000-24,999,999........................................... 3 5 89 25,000,000-29,999,999........................................... 2 4 93 30,000,000-34,999,999........................................... 1 2 95 35,000,000-39,999,999........................................... .............. 0 95 [[Page 34733]] 40,000,000-44,999,999........................................... .............. 0 95 45,000,000-49,999,999........................................... .............. 0 95 50,000,000-54,999,999........................................... 1 2 96 55,000,000-59,999,999........................................... .............. 0 96 60,000,000-64,999,999........................................... .............. 0 96 65,000,000-69,999,999........................................... 1 2 98 70,000,000-74,999,999........................................... .............. 0 98 75,000,000-79,999,999........................................... .............. 0 98 80,000,000-84,999,999........................................... .............. 0 98 85,000,000-89,999,999........................................... .............. 0 98 90,000,000-94,999,999........................................... .............. 0 98 95,000,000-99,999,999........................................... 1 2 100 ----------------- Subtotal.................................................... 57 .............. .............. Unknown..................................................... 3 .............. .............. ================= Total................................................... 60 .............. .............. ---------------------------------------------------------------------------------------------------------------- Table 5 stratifies the small businesses according to their number of employees. The company with the lowest number of employees had two employees and the company with the highest number had 233 employees. The majority of the small businesses (64 percent) have fewer than 50 employees and the vast majority of these businesses (85 percent) have fewer than 100 employees. Table 5.--Small Business Size by Number of Employees ---------------------------------------------------------------------------------------------------------------- Number of Percentage of Number of employees small small Cumulative businesses businesses percentage ---------------------------------------------------------------------------------------------------------------- 1-10............................................................ 9 15 15 11-20........................................................... 13 22 37 21-30........................................................... 4 7 44 31-40........................................................... 7 12 56 41-50........................................................... 5 8 64 51-60........................................................... 2 3 68 61-70........................................................... 2 3 71 71-80........................................................... 4 7 78 81-90........................................................... 0 0 78 91-100.......................................................... 4 7 85 101-110......................................................... 1 2 86 111-120......................................................... 0 0 86 121-130......................................................... 1 2 88 131-140......................................................... 0 0 88 141-150......................................................... 4 7 95 151-160......................................................... 2 3 98 161-170......................................................... 0 0 98 171-180......................................................... 0 0 98 181-190......................................................... 0 0 98 191-200......................................................... 0 0 98 201-210......................................................... 0 0 98 211-220......................................................... 0 0 98 221-230......................................................... 0 0 98 231-240......................................................... 1 2 100 ----------------- Subtotal.................................................... 59 .............. .............. Unknown..................................................... 1 .............. .............. ================= Total................................................... 60 .............. .............. ---------------------------------------------------------------------------------------------------------------- Description of the projected reporting, recordkeeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record. The compliance costs to small businesses subject to the provisions in the proposed rule are primarily related to testing battery and cell designs, shipping of both prototypes and final products, and the training required for employees newly classified as hazmat employees. Each of these will be discussed separately. Additionally, we will discuss the extent to which these [[Page 34734]] additional compliance costs can be passed on to the small businesses' customers. Testing Based on the information presented in the NPRM, threshold analysis, regulatory evaluation and industry comments, testing requirements would be affected in the following manner. 1. The rule would remove the small battery exception to testing requirements. The following exceptions would be removed from the HMR, thus requiring that batteries falling into the categories outlined below be tested in accordance with the UN Manual of Tests and Criteria. Liquid cathode cell--no more than 0.5 grams of alloy per cell Liquid cathode battery--no more than 1 gram of lithium or lithium alloy Solid cathode cell--no more than 1 gram of lithium or lithium alloy per cell Solid cathode battery--no more than 2 grams of lithium or lithium alloy Lithium ion cell--no more than 1.5 grams of equivalent lithium content Lithium ion battery--no more than 8 grams of equivalent lithium content 2. Exceptions to the battery testing requirements would include: Batteries and cells that differ from a tested type by a change of no more than 0.1 gram or 20 percent by mass, whichever is greater. Batteries that are of a design similar to one that has been previously tested under UN standards and contain lithium content less than the original design. 3. At present, small battery and cell manufacturers and distributors are required to test all mid-size and larger batteries according to the 8 step approach in the UN Manual of Tests and Criteria. Estimated testing costs used for this IRFA are those charged by outside testing laboratories because virtually all of the small companies send their batteries to outside laboratories. The cost to test a particular design prototype ranges from approximately $5,000 to $8,000. Testing cost estimates are based on input provided by one independent testing laboratory (Motorola) and contacting nine businesses. These costs do not include the costs of supplying the test batteries (up to 24 for rechargeable batteries) or the cost of shipping the prototypes to the testing lab. The primary reason for this is that the tests are already required for any cell or batteries that are shipped internationally. The major incremental cost under the proposed regulation for the small producers of lithium batteries and cells will result from the required testing of small batteries. To determine the number of new design types requiring testing, a series of questions were posed to nine businesses. First, respondents were asked to estimate the number of total new designs that would be tested this year and how they expected this number to change in the next five years. Respondents were asked to categorize the new design types according to size (small, mid- size, large) and type (primary, rechargeable). Contacted businesses were then asked to estimate the fraction of the new design types that could potentially be considered exempt due to the following reasons: (a) They are nearly identical to existing designs (e.g., batteries and cells that differ from a tested type by a change of no more than 0.1 gram or 20 percent by mass, whichever is greater) or (b) they will be manufactured in production runs of fewer than 100 batteries. The costs associated with testing batteries falling into these categories were excluded from the analysis. The costs associated with testing new battery designs designated for international shipment were also excluded from the analysis. The basis of this exclusion is that lithium batteries that are manufactured within the U.S. but subsequently transported by aircraft to foreign destinations are already transported in accordance with the ICAO Technical Instructions, which have adopted the U.N. test standards. Thus, harmonization with the international standards would not impose any marginal costs on businesses engaged in the international transport of lithium batteries. Table 6 shows the number of existing designs subject to testing over the two-year period following the effective date of the proposed rule as well as the number of new designs that would require testing over a 5-year period for the contacted businesses. As noted previously, the nine contacted small businesses comprise an estimated 31.9 percent ($217.1 million/$681.1 million) of all small businesses affected by the proposed rule in annual revenues. Thus, to expand these results to the entire population of small businesses, an expansion factor of 3.1 ($681.1 million/$217.1 million) was used to estimate the total number of designs requiring testing among all small businesses and these figures are also shown in Table 6. Table 6.--Annual Testing Requirements [Number of battery and cell designs] -------------------------------------------------------------------------------------------------------------------------------------------------------- Small businesses contacted All small businesses ------------------------------------------------------------------------------------------------------- Year New designs New designs Previous --------------------------------------- Previous -------------------------------------- designs Small Mid-size Large designs Small Mid-size Large -------------------------------------------------------------------------------------------------------------------------------------------------------- 2004............................................ 254 115 61 2 797 360 190 5 2005............................................ 254 130 72 2 797 406 225 5 2006............................................ ........... 146 84 2 ........... 458 265 5 2007............................................ ........... 165 100 2 ........... 516 313 5 2008............................................ ........... 186 118 2 ........... 582 369 5 -------------------------------------------------------------------------------------------------------------------------------------------------------- Two scenarios were developed to reflect the costs for low- and high-end estimates of $5,000 and $8,000 per test, respectively. The costs for these scenarios are shown in Tables 7 and 8. There are no testing costs for mid-size and large batteries because they are already required to be tested. The production and shipping costs are the same for both estimates. The production costs assume that an average of 20 batteries is required for testing each design and that each battery produced for testing costs approximately $50. The shipping costs were determined by averaging the FedEx Express 2-day shipping costs for a package of 20 one-pound batteries to Motorola's Georgia testing location from New York City, Orlando, and Los Angeles. A certified packaging weighing two pounds and costing $5 was assumed and FedEx's $30 hazmat surcharge was included in the shipping cost estimate. [[Page 34735]] Table 7.--Annual Costs of Complying with Testing Requirements [Low-end estimate] -------------------------------------------------------------------------------------------------------------------------------------------------------- New designs Year Previous --------------------------------------- Production Shipping Total Discounted designs Small Mid-size Large total -------------------------------------------------------------------------------------------------------------------------------------------------------- 2004............................................ 3,986,929 1,801,334 ........... ........... 1,157,653 85,087 7,031,004 7,031,004 2005............................................ 3,986,929 2,030,941 ........... ........... 1,203,574 88,463 7,309,907 6,831,689 2006............................................ ........... 2,289,815 ........... ........... 457,963 33,660 2,781,439 2,429,416 2007............................................ ........... 2,581,687 ........... ........... 516,337 37,951 3,135,975 2,559,889 2008............................................ ........... 2,910,761 ........... ........... 582,152 42,788 3,535,702 2,697,370 -------------- Total....................................... 7,973,858 11,614,539 ........... ........... 3,917,679 287,949 23,794,026 21,549,368 Avg..................................... 1,594,772 2,322,908 ........... ........... 783,536 57,590 4,758,805 4,309,874 -------------------------------------------------------------------------------------------------------------------------------------------------------- Table 8.--Annual Costs of Complying with Testing Requirements [High-end estimate] -------------------------------------------------------------------------------------------------------------------------------------------------------- New designs Year Previous --------------------------------------- Production Shipping Total Discounted designs Small Mid-size Large total -------------------------------------------------------------------------------------------------------------------------------------------------------- 2004............................................ 6,379,087 2,882,135 ........... ........... 1,157,653 85,087 10,503,962 10,503,962 2005............................................ 6,379,087 3,249,506 ........... ........... 1,203,574 88,463 10,920,630 10,206,196 2006............................................ ........... 3,663,704 ........... ........... 457,963 33,660 4,155,328 3,629,424 2007............................................ ........... 4,130,698 ........... ........... 516,337 37,951 4,684,987 3,824,345 2008............................................ ........... 4,657,218 ........... ........... 582,152 42,788 5,282,158 4,029,733 -------------- Total....................................... 12,758,173 18,583,262 ........... ........... 3,917,679 287,949 35,547,064 32,193,660 Avg..................................... 2,551,635 3,716,652 ........... ........... 783,536 57,590 7,109,413 6,438,732 -------------------------------------------------------------------------------------------------------------------------------------------------------- As indicated in Table 7, the incremental cost for the low-end estimate over a five-year period for all 60 small businesses would be $21,549,368, discounted at 7 percent per year, while the discounted average annual cost would be $4,309,874.\1\ For the high-end estimate shown in Table 8, the incremental discounted cost over a five-year period would be $32,193,660 while the discounted average annual cost would be $6,438,732. An average annual discounted cost over the five- year period for the averaged low- and high-end estimates would be about $5,374,303 for the same companies. --------------------------------------------------------------------------- \1\ Annual costs are presented in present value terms based on a real discount rate of 7 percent as prescribed in the Office of Management and Budget Circular A-94. --------------------------------------------------------------------------- For each company there would be an estimated incremental discounted cost of approximately $71,831 annually for the low-end testing costs and about $107,312 average for the discounted high-end testing costs over the five-year period. The average annual estimated discounted testing cost per company using the averaged high- and low-end costs would be approximately $89,572. Shipping Currently, under 49 CFR 173.185, lithium batteries and cells are required to be shipped as Class 9 hazardous materials with certain significant exceptions. The proposed rules would eliminate one of these exceptions, requiring mid-size batteries and cells to be shipped as Class 9 materials. In addition, new packaging integrity and communication requirements now apply to small batteries and cells shipped in packages of more than 12 batteries or 24 cells, except when installed in equipment. To ship lithium cells and batteries 
- **truncated:** true
- **body characters:** 69705