{"operation":"document","citation":"84 FR 38180","title":"Hazardous Materials: Response to an Industry Petition To Reduce Regulatory Burden for Cylinder Requalification Requirements","source_type":"rulemaking","agency":"Pipeline and Hazardous Materials Safety Administration","status":"proposed","official":true,"published_on":"2019-08-06","effective_on":null,"summary":"PHMSA is proposing to revise requirements on the requalification period for certain DOT 4-series specification cylinders in non-corrosive gas service in response to a petition for rulemaking submitted by the National Propane Gas Association. This rulemaking proposes regulatory relief and a reduction in the requalification- related costs for propane marketers, distributors, and others in non- corrosive gas service.","machine_formats":{"json":"https://regulus.evalyn.ai/document/federal-register-2019-16677.json","markdown":"https://regulus.evalyn.ai/document/federal-register-2019-16677.md"},"app_url":"https://regulus.evalyn.ai/document/federal-register-2019-16677","source_url":"https://www.federalregister.gov/documents/2019/08/06/2019-16677/hazardous-materials-response-to-an-industry-petition-to-reduce-regulatory-burden-for-cylinder","body":"Federal Register, Volume 84 Issue 151 (Tuesday, August 6, 2019) [Federal Register Volume 84, Number 151 (Tuesday, August 6, 2019)] [Proposed Rules] [Pages 38180-38198] From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ] [FR Doc No: 2019-16677] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration 49 CFR Part 180 [Docket No. PHMSA-2017-0083 (HM-219B)] RIN 2137-AF30 Hazardous Materials: Response to an Industry Petition To Reduce Regulatory Burden for Cylinder Requalification Requirements AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). ----------------------------------------------------------------------- SUMMARY: PHMSA is proposing to revise requirements on the requalification period for certain DOT 4-series specification cylinders in non-corrosive gas service in response to a petition for rulemaking submitted by the National Propane Gas Association. This rulemaking proposes regulatory relief and a reduction in the requalification- related costs for propane marketers, distributors, and others in non- corrosive gas service. DATES: Comments must be received by October 7, 2019. To the extent possible, PHMSA will consider late-filed comments as a final rule is developed. ADDRESSES: You may submit comments identified by the Docket Number PHMSA-2017-0083 (HM-219B) by any of the following methods: Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments. Fax: 1-202-493-2251. Mail: Docket Management System; U.S. Department of Transportation, West Building, Ground Floor, Room W12-140, Routing Symbol M-30, 1200 New Jersey Avenue SE, Washington, DC 20590. Hand Delivery: To the Docket Management System; Room W12- 140 on the ground floor of the West Building, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Instructions: All submissions must include the agency name and Docket Number (PHMSA-2017-0083) or RIN (2137-AF30) for this rulemaking at the beginning of the comment. To avoid duplication, please use only one of these four methods. All comments received will be posted without change to the Federal Docket Management System (FDMS) and will include any personal information you provide. Docket: For access to the dockets to read background documents or comments received, go to http://www.regulations.gov or DOT's Docket Operations Office (see ADDRESSES). Privacy Act: In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to http://www.regulations.gov , as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at http://www.dot.gov/privacy . FOR FURTHER INFORMATION CONTACT: Shelby Geller, Standards and Rulemaking Division, (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: Table of Contents I. Background A. History B. Petition P-1696 C. Statement of Enforcement Discretion II. Overview III. Regulatory Analyses and Notices A. Statutory/Legal Authority for This Rulemaking [[Page 38181]] B. Executive Order 12866 and DOT Regulatory Policies and Procedures C. Executive Order 13771 D. Executive Order 13132 E. Executive Order 13175 F. Regulatory Flexibility Act, Executive Order 13272, and DOT Policies and Procedures G. Paperwork Reduction Act H. Regulation Identifier Number (RIN) I. Unfunded Mandates Reform Act J. Environmental Assessment K. Privacy Act L. Executive Order 13609 and International Trade Analysis M. National Technology Transfer and Advancement Act N. Executive Order 13211 List of Subjects I. Background A. History On January 30, 2015, PHMSA published a notice of proposed rulemaking (NPRM) titled ``Hazardous Materials: Adoption of Special Permits (MAP-21) (RRR)'' [Docket No. PHMSA-2013-0042 (HM-233F); 80 FR 5339]. The HM-233F NPRM proposed to adopt provisions contained in 98 widely-used or longstanding special permits with an established safety record. Following a 60-day comment period, PHMSA published a final rule on January 21, 2016, that adopted the provisions of 96 of these special permits [81 FR 3635]. The HM-233F final rule became effective on February 22, 2016. The HM-233F final rule amended Sec. 180.209(e), which details conditions for allowing the requalification period to be longer for DOT 4-series specification cylinders in certain hazardous material service. Prior to publication of the final rule, Sec. 180.209(e) authorized DOT 4B, 4BW, 4BA, or 4E cylinders used exclusively for a specified list of hazardous materials (non-corrosive gases) to be requalified by volumetric expansion every 12 years, instead of every 5 years. Alternatively, these cylinders were authorized to be requalified by the proof pressure test method every 7 years after the first 12-year period. A proof pressure test is a pressurization test without the determination of a cylinder's expansion, and a volumetric expansion test determines the total and permanent expansion of a cylinder at a given pressure and is conducted by either water jacket or direct expansion test, both of which are conducted with water (see Sec. 180.203). In the HM-233F NPRM, PHMSA proposed to adopt the provisions of special permit 12084, which was issued to Honeywell International, Inc.\\1\\ This special permit authorized the requalification of DOT 4B, 4BA, or 4BW cylinders in accordance with Sec. 180.209(e) for 11 additional non-corrosive gases. PHMSA identified this special permit as suitable for adoption into the regulations. In the HM-233F NPRM, PHMSA proposed to revise Sec. 180.209(e) by replacing the list of specific hazardous materials with broader applicability to non-corrosive gases commercially free from corroding components. --------------------------------------------------------------------------- \\1\\ https://www.phmsa.dot.gov/approvals-and-permits/hazmat/file-serve/offer/SP12084.pdf/offerserver/SP12084 . --------------------------------------------------------------------------- PHMSA also proposed to amend the requalification periods of authorized cylinders for both the volumetric expansion and proof pressure tests in Sec. 180.209(e). Specifically, PHMSA proposed to standardize the requalification period to 10 years for both the volumetric expansion test (previously a 12-year period) and the proof pressure test (previously a 7-year period after an initial 12-year period). While this proposed change was not discussed in the preamble of the HM-233F NPRM, PHMSA did propose amended regulatory text. PHMSA received no adverse comments to any of the proposed changes to Sec. 180.209(e)--the adoption of special permit 12084 and 10-year requalification period--and therefore adopted the language as proposed in the final rule. While the effective date of the final rule was February 22, 2016, PHMSA allowed for delayed compliance to begin on January 23, 2017. B. Petition P-1696 On January 13, 2017, the National Propane Gas Association (NPGA) submitted a petition to PHMSA and the Office of the Secretary of Transportation (OST) titled ``Petition for Rulemaking and Emergency Stay Cylinder Requalification Requirements'' [PHMSA-2017-0019 (P-1696) \\2\\]. NPGA requested that PHMSA revise the initial timeframe before requalification, revise the requalification period for both the volumetric expansion and proof pressure tests in Sec. 180.209(e) to those authorized prior to the HM-233F final rule, and update the table in Sec. 180.209(a) accordingly. NPGA also requested a Statement of Enforcement Discretion while the rulemaking action was pending. --------------------------------------------------------------------------- \\2\\ See P-1696: https://www.regulations.gov/docket?D=PHMSA-2017-0019 . --------------------------------------------------------------------------- In the petition, NPGA advised PHMSA and OST that the HM-233F rulemaking created potential impacts and unanticipated costs. Specifically, NPGA asserted that the regulatory change to the requalification period created confusion in the propane industry because it was unclear whether those cylinders manufactured or requalified by the volumetric expansion test within the last 10 to 12 years had to be immediately requalified, since prior to the final rule they would not have required requalification until the 12-year date. Furthermore, NPGA stated that the requirement to test cylinders following manufacture or volumetric expansion testing more frequently (i.e., every 10 years instead of every 12 years) would increase qualification and training costs. NPGA explained that current industry practice \\3\\ is to mark newly manufactured cylinders, eligible for requalification in accordance with Sec. 180.209(e), with a 12-year requalification mark. Even though this marking is not required by the Hazardous Materials Regulations (HMR; 49 CFR parts 171-180), industry would have to train employees to ignore those markings. Additional training would be required on the revised requalification periods for both volumetric expansion and proof pressure testing. --------------------------------------------------------------------------- \\3\\ This is voluntary industry practice and not required by the HMR. --------------------------------------------------------------------------- On March 2, 2017, PHMSA met with NPGA representatives to: (1) Better understand NPGA's concerns; (2) identify existing industry practice and request data to assess the impact of the revised cylinder requalification periods; and (3) evaluate the merits of a rulemaking and Statement of Enforcement Discretion. During this meeting, NPGA reiterated their petition, in that the change in requalification intervals would impose unanticipated industry costs. Furthermore, NPGA conveyed that a majority of their associate members requalify certain DOT 4-series specification cylinders by volumetric expansion testing. Following these discussions, PHMSA accepted NPGA's petition for rulemaking. C. Statement of Enforcement Discretion On March 17, 2017, PHMSA issued a Statement of Enforcement Discretion stating that it will not take enforcement action against a person who requalifies DOT 4-series specification cylinders using volumetric expansion testing pursuant to a 12-year requalification period while it reviews NPGA's petition for rulemaking.\\4\\ This Statement of [[Page 38182]] Enforcement Discretion specified that until further action, DOT 4- series specification cylinders requalified by volumetric expansion in accordance with Sec. 180.209(e) may have a 10- or 12-year requalification period without any enforcement action taken. --------------------------------------------------------------------------- \\4\\ Pipeline and Hazardous Materials Safety Administration's Notice Regarding the Requalification Period for Department of Transportation (DOT) Specification Cylinders, issued May 17, 2017, available at: https://www.regulations.gov/document?D=PHMSA-2017-0083-0001 . --------------------------------------------------------------------------- II. Overview PHMSA has reviewed NPGA's petition for rulemaking and agrees that it merits a rulemaking to consider revising the Sec. 180.209(e) requalification period, as accepting the petition is expected to reduce regulatory burden and industry cost. PHMSA does not anticipate that this revision poses any increased safety risk, as historically these cylinders were authorized to be requalified on a 12-year cycle for volumetric expansion testing and on a 7-year cycle (after an initial 12-year period) for proof pressure testing with no known incidents attributable to the requalification timeframe. It should be noted that in accordance with Sec. 180.205(c), even if a cylinder is due for requalification, it may be used until emptied, as long as it was filled prior to the requalification due date. Once emptied and placed into transportation, it must be requalified in accordance with the appropriate test method before being refilled. In this NPRM, PHMSA is proposing to return the initial and subsequent requalification periods to 12 years for volumetric expansion tests, as proposed in the NPGA petition and authorized prior to HM- 233F. PHMSA is proposing to also return the initial requalification period for proof pressure testing to 12 years, but maintain the 10-year period for subsequent proof pressure requalification testing as adopted in HM-233F final rule. The proof pressure test requalification period of 10 years was not proposed in NPGA's petition for rulemaking (proposed as 7 years). We acknowledge that the proposed 10-year requalification period will likely result in one-time industry training costs; however, the allowance to requalify a cylinder by proof pressure test every 10-years, instead of every 7 years, after the initial 12- year requalification period, may outweigh the costs of training because of less frequent cylinder requalification. Thus, PHMSA believes that this could allow for the greatest regulatory relief. PHMSA invites comments on the potential for costs or savings that may result from maintaining a 10-year requalification period following the initial 12- year requalification period for proof pressure testing instead of returning to the 7-year cycle, after the initial 12-year period (as proposed by the NPGA in its petition and reflective of the requalification period prior to publication of the HM-233F final rule). Additionally, PHMSA is proposing to revise the title of Sec. 180.209(e) to more appropriately reflect the regulatory provisions in this paragraph. PHMSA is also proposing to revise the table in Sec. 180.209(a) to properly reflect the baseline requalification period and the alternate requalification period allowances for various DOT specification cylinders. The baseline for DOT 4B, 4BA, 4BW, and 4E cylinder requalification is 5-years, but in accordance with the proposed language of Sec. 180.209(e), these cylinders may be requalified every 10 or 12 years, under the specified conditions and dependent on the type of pressure test performed. In addition, PHMSA proposes to add a ``7'' to the Sec. 180.209(a) table for DOT 4B, 4BA, or 4BW cylinders, as they are authorized for requalification every 7 or 12 years, instead of 5 years, when used as a fire extinguisher in accordance with Sec. 180.209(j). There is no substantive change in adding ``7'' to the table as this is a conforming amendment for consistency between the table in paragraph (a) and the provisions in paragraph (j), which was inadvertently deleted in the HM-233F final rule. PHMSA is also proposing to amend the table in Sec. 180.209(a) to remove any reference to paragraph (e) for DOT 3A, 3AA, 3AL, 3AX, 3AAX, 3B, 3BN, and 4AA480 cylinders. Section 180.209(e) does not authorize requalification of these cylinder types. Therefore, this NPRM adjusts for any requalification period that is not currently authorized. Further, PHMSA is proposing to make editorial corrections to the table for consistency. We propose to: Delete ``DOT'' preceding 3, 3A, 3AA, 3AL, 3AX, 3AAX, and 4E cylinders because the other entries do not have a similar qualifier; specify ``service pressure'' in the ``Minimum test pressure (psig)'' column for DOT 4D, 4DA, and 4DS cylinders to match other entries; and remove a duplicative citation of Sec. 180.209 for DOT 3AL cylinders to be consistent with the other requalification period references. III. Regulatory Analyses and Notices A. Statutory/Legal Authority for This Rulemaking This rulemaking is published under the authority of Federal Hazardous Materials Transportation Law (Federal hazmat law; 49 U.S.C. 5101 et seq.), which authorizes the Secretary of Transportation to ``prescribe regulations for the safe transportation, including security, of hazardous materials in intrastate, interstate, and foreign commerce.'' The Secretary's authority is delegated to PHMSA at 49 CFR 1.97. This rulemaking proposes to amend the requalification periods for certain DOT 4-series specification cylinders under relief provided in Sec. 180.209(e) and to revise the requalification table in Sec. 180.209(a) accordingly. B. Executive Order 12866 and DOT Regulatory Policies and Procedures This rulemaking is considered a nonsignificant regulatory action under section 3(f) of Executive Order 12866 (``Regulatory Planning and Review'') and was not reviewed by the Office of Management and Budget (OMB). This rulemaking is also considered a nonsignificant rulemaking under the DOT's Policies and Procedures for Rulemakings [DOT Order 2100.6; December 20, 2018]. Executive Order 12866 (``Regulatory Planning and Review'') \\5\\ requires agencies to regulate in the ``most cost-effective manner,'' to make a ``reasoned determination that the benefits of the intended regulation justify its costs,'' and to develop regulations that ``impose the least burden on society.'' --------------------------------------------------------------------------- \\5\\ See 58 FR 51735, October 4, 1993 for Executive Order 12866 --------------------------------------------------------------------------- Additionally, Executive Order 12866 requires agencies to provide a meaningful opportunity for public participation, which also reinforces requirements for notice and comment under the Administrative Procedure Act (APA).\\6\\ Therefore, PHMSA solicits comment on the revised requalification periods for DOT 4-series specification cylinders as proposed in Sec. 180.209(e). PHMSA also seeks comment on the preliminary cost and cost savings analyses, including industry costs or cost savings due to the revised requalification periods for volumetric expansion and proof pressure testing. --------------------------------------------------------------------------- \\6\\ See 5 U.S.C. 553. --------------------------------------------------------------------------- Overall, this rulemaking maintains the continued safe transportation of hazardous materials while producing a net cost savings. PHMSA's findings are summarized here and described in further detail in the following 13 sections, which together comprise our preliminary analysis for this NPRM: 1. Summary of preliminary findings 2. Description of the need for the regulatory action 3. Definition of the baseline and rulemaking scenarios 4. The time horizon of analysis 5. Description of the type and number of affected cylinders 6. Description of the type and number of affected entities [[Page 38183]] 7. Analysis of requalification cost savings 8. Analysis of training costs and cost savings 9. Analysis of total net cost savings 10. Evaluation of non-quantified and non-monetized impacts 11. Characterization of additional uncertainty in impacts, including estimated costs, cost savings, and net cost savings 12. Supplemental analysis regarding the number of affected cylinders 13. Supplemental analysis regarding possible effects on proof pressure- tested cylinders Summary of Preliminary Findings PHMSA's preliminary analysis finds that the proposed changes would result in total net cost savings of approximately $142.4 million over 10 years, or $20.3 million annualized, when discounted at 7 percent. These cost savings are almost entirely based on two effects. The first effect is avoiding the immediate, accelerated requalification of approximately 5 million DOT 4-series specification cylinders that would otherwise be required if the proposed changes of this rulemaking are not adopted. The second effect is an anticipated reduction in the number of cylinders in need of requalification in any given year. The avoidance of accelerated requalification occurs in year one, and the ``enduring'' effect of reducing the number of cylinders in need of requalification occurs in subsequent years (years 2-10). Our primary analysis focuses on cost savings to entities that requalify cylinders by volumetric expansion testing. However, this NPRM also proposes to retain the 10-year requalification period for the proof pressure test adopted under the HM-233F final rule, so we assume cylinder marketers require some training to ensure knowledge of the revised requalification timeframes for proof pressure testing. This NPRM would also relieve cylinder manufacturers of training to ensure that voluntary stamping practices align with the initial requalification timeframe, resulting in training-related cost savings for cylinder manufacturers. On net, we estimate training cost savings at approximately $0.2 million. We add the two types of requalification cost savings to the net cost savings related to training to determine the total net cost savings. See Exhibit 1. --------------------------------------------------------------------------- \\7\\ Due to rounding, these estimates and findings may differ slightly from those expressed elsewhere in this analysis. Net cost savings is defined as cost savings minus costs, but in Exhibit 1, it is presented equivalently as the sum of (net) cost savings. Year-one effects are undiscounted. Effects related to years two through ten are discounted at 7%. Total effects, covering the 10-year time period of analysis, include an undiscounted, year-one value, which is added to values discounted at 7% for years two through ten. Exhibit 1--Summary of Estimates and Findings \\7\\ ------------------------------------------------------------------------ ------------------------------------------------------------------------ Number of Cylinders Affected in Year 1..... 5 million. Annual Number of Cylinders Affected in 500,000. Years 2-10. Requalification Cost Savings in Year 1..... $86.1 million. Requalification Cost Savings per Cylinder $17.22. (weighted average). Training Net Cost Savings in Year 1........ $0.2 million. Requalification Cost Savings in Years 2-10 $56.1 million. (7%). Total Net Cost Savings (7%)................ $142.4 million. ------------------------------------------------------------------------ Exhibit 1 shows ``year one,'' monetized cost savings as well as ``enduring'' cost savings in years 2-10 based on a reduction in the number of cylinders in need of requalification. Please see the section, ``Analysis of total net cost savings,'' for additional tabulation of the total net cost savings of the rule, discounted over 10 years. If one were to present these cost savings on an indefinite or perpetual time horizon, their net present value would be approximately $209.3 million at a 7% discount rate, and their annualized value would be $14.7 million, also at a 7% discount rate.\\8\\ Please note, to arrive at this calculation, year-one impacts are undiscounted because these impacts are expected to begin occurring soon after the rulemaking is made effective, if it is made effective. On a perpetual horizon, the year-one savings is $86,338,066 and subsequently, all other years repeat a savings of $8,610,338. --------------------------------------------------------------------------- \\8\\ The perpetual, annualized cost savings were calculated by discounting the net present value of cost savings ($209,342,894.57) by one year using a 7% discount rate. This is equivalent to multiplying the net present value of cost savings by 0.07. $209,342,894.57 * 0.07 = $14,654,002.62. --------------------------------------------------------------------------- Description of the Need for Regulatory Action NPGA petitioned \\9\\ PHMSA to amend Sec. 180.209(e) because the HM- 233F final rule was expected to impose a substantial cost burden on industry. Specifically, NPGA reasoned that, due to confusion about the applicability of the HMR, the requirements in the HM-233F final rule would accelerate the requalification of certain DOT 4-series specification cylinders by 2 years, even though the HMR allows a cylinder filled before the end of the requalification period to remain in service until emptied, as long as it is requalified prior to being refilled and offered back into transportation (see Sec. 180.205(c)). For example, a cylinder tested by volumetric expansion would need to be requalified every 10 years, rather than every 12 years. This 2-year acceleration would effectively force 3 years of cylinder vintages to be requalified in a single year, and thus would have a potential one-time impact on thousands of propane marketers and millions of cylinders. To avoid this substantial cost burden, PHMSA issued a Statement of Enforcement Discretion on March 17, 2017, and initiated this rulemaking, which proposes to allow affected cylinders to be initially and subsequently requalified over a 12-year period when tested by volumetric expansion. --------------------------------------------------------------------------- \\9\\ See P-1696: https://www.regulations.gov/docket?D=PHMSA-2017-0019 . --------------------------------------------------------------------------- NPGA also cited confusion stemming from the industry practice of stamping a propane cylinder at the time of manufacture with an indication that the cylinder must be requalified 12 years after the manufacture date. The HMR do not require this stamp. However, this practice means that under current requirements, retraining would be necessary to educate employees on the 10-year requalification period and to ignore the stamp marking. Further, PHMSA proposes to retain the 10-year period for proof pressure testing requalification, after the initial requalification test at 12 years. Prior to publication of the HM-233F final rule, the HMR required a 7-year timeframe for subsequent requalification by proof pressure. In its petition, NPGA asked that PHMSA return the proof pressure [[Page 38184]] test requalification periods of paragraph (e) to 7 years. However, PHMSA is proposing to maintain the 10-year requirement on the basis that it may add regulatory relief. PHMSA solicits comments regarding this proposal, especially as it differs from the NPGA petition (P- 1696). To address possible cost-saving effects on proof pressure-tested cylinders, PHMSA offers a supplemental analysis in the last section of this analysis. Due to data uncertainties, this supplemental cost savings analysis is separate from and secondary to our primary analysis methods and estimates. PHMSA solicits comments to address these data uncertainties, specifically comments regarding the extent of proof pressure testing. Definition of the Baseline and Rulemaking Scenarios This rulemaking is expected to have a variety of effects or impacts, some of which result in cost savings, others in costs. We do not estimate benefits in this analysis because PHMSA anticipates that the proposed changes maintain an equivalent level of safety. This section describes the baseline and rulemaking scenarios, which are the basis for determining whether the proposed rule may result in costs or cost savings. Absent rulemaking action, the existing Statement of Enforcement Discretion relieves cylinder marketers of the HM-233F requirement to requalify cylinders every 10 years. However, the Statement of Enforcement Discretion does not provide regulatory certainty. Therefore, PHMSA uses the HM-233F or current HMR standards as the baseline, and uses this rulemaking action (HM-219B) as the rulemaking scenario and basis for incremental change. Thus, in the baseline, requalifications are accelerated by 2 years, resulting in costs; in the rulemaking scenario, these accelerated requalifications are avoided, resulting in cost savings. This effect would occur in year one of impacts. In addition, in subsequent years, the pool of cylinders requiring requalification would be larger in the baseline than in the rulemaking scenario. Thus, if this rulemaking becomes effective, PHMSA is also providing ``enduring'' cost savings due to fewer cylinders being in need of requalification in the rulemaking versus the baseline scenario. These cost saving effects are the main effects of this proposed rulemaking. Please note that this analysis focuses on the cost and cost-savings impacts of the 2-year acceleration of requalification by volumetric expansion because there is substantial uncertainty regarding the proportion and number of cylinders that are requalified by proof pressure testing. However, in the last section of this cost-savings analysis, we attempt to address this uncertainty by providing a supplemental analysis illustrating possible cost-savings effects on proof pressure-tested cylinders. In the baseline, proof pressure-tested cylinders must be requalified every 7 years after the initial 12-year period; in the rulemaking scenario, these cylinders can be requalified every 10 years after the initial 12-year period. This may enhance regulatory flexibility, and is a possible mechanism for cost savings. To better address these uncertainties in future analyses, PHMSA solicits comment on the proportion and number of cylinders that are proof pressure-tested versus cylinders tested using other methods. Due to data uncertainties, we limit our discussion of these proof-pressure cost savings to the supplemental analysis--they do not factor into our primary estimates for cost savings. PHMSA also anticipates another, relatively smaller effect: Cost savings that result from relieving manufacturers of the need to mark cylinders with a revised requalification timeframe. This marking is not an HMR requirement. However, in the baseline scenario, this marking would need to be revised to indicate a 10-year initial requalification timeframe, resulting in costs; in the rulemaking scenario, this marking could continue to indicate a 12-year initial requalification timeframe, resulting in avoided costs or cost savings. In addition to cost savings, the HM-219B proposal to retain a revised timeframe for subsequent proof pressure requalifications may result in training costs to cylinder marketers. In the baseline, current HMR requirements would necessitate this training and imposition of costs on cylinder marketers. Additionally, the rulemaking scenario will still necessitate this training and imposition of costs, since proof pressure requirements differ from pre-HM-233F conditions. In summation, this rulemaking may have a variety of cost and cost- savings effects, but the main effects are due to the baseline and rulemaking scenarios for cylinders requalified by volumetric expansion. In the baseline scenario, cylinders must be initially requalified every 10 years. This is the current HMR requirement, as codified in HM-233F. Conversely, in the rulemaking scenario, cylinders tested by volumetric expansion must be requalified every 12 years. This is the change proposed in this rulemaking (HM-219B), which effectively revises the requalification timeframe for volumetric expansion testing back to the standards in place before HM-233F was published. See Exhibit 2. Exhibit 2--Impacts of HM-219B Provisions for Volumetric Expansion Testing ------------------------------------------------------------------------ Baseline (no Rulemaking provision action) HM-219B amendments ------------------------------------------------------------------------ Revise Sec. 180.209(e)........ HMR remains as PHMSA reverts text made effective in in Sec. January 2017, and 180.209(e) to its regulatory text earlier iteration remains the same before HM-233F. as in HM-233F. DOT cylinders must DOT cylinders must be requalified be requalified every 10 years. every 12 years. ------------------------------------------------------------------------ The Time Horizon of Analysis This analysis assumes that this rulemaking will result in a ``one- time'' impact occurring in the first year the rulemaking is effective due to accelerated requalifications. After this first year, the rulemaking will also result in a reduction in the number of cylinders requiring requalification in any one year. With respect to year-one impacts, we can elaborate further with an example using the baseline and rulemaking scenarios. In the baseline scenario, cylinder marketers need to requalify three different vintages of cylinders in 2019, specifically those cylinders manufactured or requalified in 2007, 2008, and 2009. This is the direct result of the requirement that these cylinders be requalified on a 10-year timeframe instead of a 12-year timeframe. As such, the HM-233F final rule imposed an accelerated requalification for cylinders manufactured or requalified in 2008 and 2009, whereas the cylinders [[Page 38185]] manufactured or requalified in 2007 would need to be requalified in 2019 under either the baseline or rulemaking scenario. In the baseline scenario, 3 years' worth of cylinders need to be requalified in a single year, with the 2008 and 2009 cylinders needing requalification earlier than anticipated. Conversely, in the rulemaking scenario, the 2008 and 2009 cylinders can be requalified in 2020 and 2021, respectively, and the requalification costs that the HM-233F final rule imposed are avoided. To the extent that cylinders are requalified using volumetric expansion, this NPRM proposes a requalification timeframe that would have occurred were the HM-233F final rule never published. PHMSA's analysis sees this effect as a ``one-time'' or ``year one'' impact. In the baseline, it is a one-time cost imposition; in the rulemaking scenario, it is a one-time avoidance of these costs (cost savings). See Exhibit 3. BILLING CODE 4910-60-P [GRAPHIC] [TIFF OMITTED] TP06AU19.047 BILLING CODE 4910-60-C As evident in Exhibit 3, the baseline scenario (HM 233F; current HMR requirements) primarily affects cylinder requalification in the first year of the rule's effect. Before this first year, there is no difference between the baseline and rulemaking scenario. After this first year of effect (e.g., 2019 onward), the requalification cycle returns to a ``normal state,'' where only one vintage of cylinders are requalified per year, although the number of cylinders in need of requalification in any given year would be smaller in the rulemaking than in the baseline scenario. Note that we do not have data on the manufacturing and requalification dates for the affected cylinders--this affects how we chose to model the timing of requalification in Exhibit 3 and the impacts of the baseline and rulemaking scenarios. As evident in Exhibit 3, we assume that each cylinder has a specific manufacturing or requalification year and do not distinguish between the cylinders on a more granular level (e.g., month-to-month). For instance, we do not distinguish between a cylinder from January 2007 and one from June 2007. All 2007 cylinders are assumed to be requalified in 2019, as well as all 2008 and 2009 cylinders in the baseline. We make no further distinction about the timing of the manufacture and requalification of affected cylinders. Further, our analysis does not have a discounting component for avoiding accelerated requalifications because it is assumed to occur in the first year of the rulemaking's implementation, without distinctions between an expenditure made in January 2019 and one in December 2019, for example. For these reasons, the costs of accelerated requalification (or the avoidance of these costs) are undiscounted, one-time or ``year one'' impacts. In addition to ``year one'' impacts, there is potential for ``enduring'' effects occurring in subsequent years. In subsequent years, the pool of DOT 4-series specification cylinders that need requalification in a given year may be smaller in the rulemaking scenario than in the baseline scenario. In the baseline scenario, this requalification pool represents effectively 1/10th of cylinders in service since these cylinders would need requalification once every 10 years. In the rulemaking scenario, this requalification pool would represent 1/12th of cylinders in service [[Page 38186]] since these cylinders would need requalification once every 12 years. This rulemaking scenario reduction in requalification may result in cost savings. We attempt to quantify and monetize this effect as a cost savings, which in tandem with the avoided accelerated requalification costs, may be substantial. PHMSA solicits comment on the ``one-time'' and ``enduring'' effects, and on this analysis in general. We also solicit comment on whether there are additional economic effects that were not foreseen that could be represented in a future, revised analysis. Description of the Type and Number of Affected Cylinders According to information provided by NPGA in P-1696, the revisions made in the HM-233F final rule affect nearly 5 million DOT 4-series specification cylinders (e.g., 4B, 4BA, 4BW, and 4E). Furthermore, NPGA estimates that 75 percent of cylinders are 20-lb. cylinders (used primarily for BBQ grills, patio heaters, construction heat, temporary heat, etc.), and the remaining 25 percent comprise a variety of sizes, e.g., 33.5 lb. (forklift cylinders), 100 lb. (exchange cylinders), and the largest size, 420 lb. propane cylinders (residential/commercial heat). Absent any other data describing the population of affected cylinders, PHMSA uses NPGA's assumptions for this analysis.\\10\\ See Exhibit 4. --------------------------------------------------------------------------- \\10\\ NPGA does not provide any supporting documentation or other information describing the basis for these estimates. Exhibit 4--Affected Cylinders \\11\\ ---------------------------------------------------------------------------------------------------------------- Number of cylinders Cylinder service sector Cylinder size Distribution (%) requiring accelerated categories requalification ---------------------------------------------------------------------------------------------------------------- Residential.......................... 20 lbs................. 75 3,750,000 Commercial........................... 33-420 lbs............. 25 1,250,000 -------------------------------------------------------------------------- Total............................ ....................... 100 5,000,000 ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- \\11\\ National Propane Gas Association, ``RE: Supplement to January 13, 2017 NPGA Petition for Rulemaking and Emergency Stay,'' February 13, 2017 [hereinafter NPGA Supplement]: https://www.regulations.gov/document?D=PHMSA-2017-0083-0003 . --------------------------------------------------------------------------- Exhibit 4 reiterates that, absent this rulemaking, approximately 5 million cylinders would need to be requalified on an accelerated basis. If this rulemaking is adopted, these 5 million cylinders can be requalified on a 12-year timeframe. As explained previously, this would revert volumetric expansion test requalification back to the timing in place before publication of the HM-233F final rule. This estimate of the number of affected cylinders is also important to the estimation of ``enduring'' cost savings. After year one, the difference between the annual number of cylinders in need of requalification in the baseline and rulemaking scenarios is an input to our method for the enduring cost savings. Specifically, NPGA's estimate of 5 million represents 2 cylinder vintages that would undergo accelerated requalification. This means an estimated 2.5 million cylinders may need requalification in any one year. As such, over 12 years, 30 million cylinders would need requalification (2.5 * 12). If this same number of cylinders were to be requalified instead over 10 years, as the","truncated":true,"body_characters":118269}