{"operation":"document","citation":"12-0225","title":"General Electric Capital Corporation — Hazardous Materials Safety Interpretation","source_type":"guidance","agency":"Pipeline and Hazardous Materials Safety Administration","status":"guidance","official":true,"published_on":"2013-05-01","effective_on":null,"summary":"12-0225 response to General Electric Capital Corporation concerning 180.503.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-interpretation-12-0225.json","markdown":"https://regulus.evalyn.ai/document/phmsa-interpretation-12-0225.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-interpretation-12-0225","source_url":"https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/legacy/interpretations/Interpretation%20Files/2012/120225.pdf","body":"<<<PAGE 1>>>\n\nU.S. Department\nof Transportation\nPipeline and Hazardous\nMaterials Safety\nAdministration\n1200 New Jersey Avenue SE\nWashington. DC 20590\nMAY· 0 1 2013\nMr. John Byrne\nManager, Regulatory Compliance\nRail Services\nGeneral Electric Capital Corporation\n161 Nmih Clark Street, i 11\nChicago, IL 60601\nReference No. I 2-0225\nDear Mr. Byrne:\nThis is in response to your October 2, 20121etter and March I4, 2013 telephone conversation\nwith a member of my staff requesting clarification of the new definition for a tank car\n\"coating/lining owner\" added to § 180.503 of the Hazardous Materials Regulations (HMR; 49\nCFR Pmis I 71-180) in a final rule the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) issued on June 25, 2012 under Docket No. PHMSA-2010-0018\n(HM-2168). You ask PHMSA to confirm if your understanding ofthe issues discussed in the\nfollowing two paragraphs is correct. You also ask who would be defined as the tank car\ncoating/lining owner if the person financially responsible for purchasing the coating/lining\nand the person financially responsible for maintaining the coating/lining are different people?\nWe apologize for the delay in responding and any inconvenience this may have caused.\nYou state the HMR's new definition for \"coating/lining owner\" differs from the one described\nin Department ofTransportation (DOT) Special Permit DOT-SP 12095 and the one proposed\nin the notice of proposed rulemaking (NPRM) issued under Docket No. HM 2168. The\ndefinition in DOT-SP 12095 states the coating/lining owner \"means the pmiy responsible for\nbearing the cost of the maintenance of the lining or coating,\" whereas the definition in the\nNPRM states it \"means the person responsible for bearing the· costs of maintaining the\nlining/coating.\" The final rule states \"Coating/lining owner means the person with the\nfinancial responsibility for purchasing and maintaining the integrity of the interior coating or\nlining.\"\nYou also state this new definition is inconsistent with how the tank car industry defines these\nterms in§ 2.1.2 of Appendix D ofthe Association of American Railroads (AAR) Manual of\nStandards and Recommended Practices, which describes it as \"the party responsible for\nbearing the cost of the maintenance for the lining or coating,\" and in Appendix U, which\ndescribes it as \"the party responsible for the maintenance for the lining or coating.\" You\nfurther state this change will have unintended consequences for General Electric Rail Services\n\n<<<PAGE 2>>>\n\nand other tank car owners without promoting rail safety. In addition, you state inclusion of\nthe word \"purchaser\" to the new definition adds considerable ambiguity to this definition in\nthat the owner of a new manufactured tank car can bill back the purchase price coating/lining\nto the lessee who is then contractually responsible for its maintenance or include the cost of\nthe coating/lining installation the lessee requests in the lessee's monthly lease payments.\nSimilarly, you state it is the industry's practice and also your company's position that the\nentity financially responsible for a tank car's coating/lining maintenance is considered and\ncontractually defined as the coating/lining owner without consideration of who actually\nfinanced its initial purchase.\nPHMSA agrees there is inconsistency with the def!nition of a tank car coating/lining owner in\nthe final rule and its iterations in the DOT-SP 12095, NPRM, and AAR Manual of Standards\nand Recommended Practices. Thank you for bringing this matter to our attention. PHMSA\nwill revise this definition in a future rulemaking to remove the words \"purchasing and\" to\nclarify that the person responsible for the maintenance of a tank car's coating or lining is the\nperson financially responsible for maintaining a tank car's coating or lining. As you stated\nearlier, this approach is compatible with the rail industry's historical use of this definition.\nI hope this satisfies your request. If you have additional questions, please contact Mr. Karl\nAlexy, StaffDirector, Hazardous Materials Division, Federal Railroad Administration, at 202-\n493-6229.\nChief, Regulatory Review and Reinvention Branch\nStandards and Rulemaking Division\n2\n\n<<<PAGE 3>>>\n\nGE Capital\nOctober 2, 2012\nRail Services\n161 N. Clark Street\n7th\nChicago, IL 60601\nUSA\nT +1312 853 5000\nU.S. DOT\nPHMSA Office of Hazardous Materials Standards\nAttn: PHH-10\nEast Building\n1200 New Jersey Avenue SE\nWashington, DC 20590-0001\nRe: Request for Interpretation of Coating/Lining Owner, 49 C.F.R. § 180.503\nDear Sir or Madam:\nPursant to 49 C.F.R. § 105.20, General Electric Railcar Services Corporation (\"GERS\") is requesting an\ninterpretation related to the Final Rule published by the Pipeline and Hazardous Materials Safety\nAdministration (\"PHMSA\") on June 25, 2012, under Docket PHMSA-2010-0018 (HM-2166). As you are\naware, the Final Rule includes the following definition:\nCoating/Lining Owner means the person with the financial responsibility for\npurchasing and maintaining the integrity of the interior coating or lining.\nSee 49 C.F.R. § 180.503.\nAs the owner of almost 30,000 tank cars, GERS has extensive experience and involvement with\ncoatings and linings. GERS has concerns that this new definition will present unintended\nconsequences for tank car owners without furthering the objective of the Final Rule to promote\nsafety within the rail industry.\nGERS filed a comment in Public Docket PHMSA-2010-0018 (HM-2166) on September 21, 2012, in\nwhich it requested that PHMSA amend the definition of coating/lining owner to mean \"the person\nresponsible for bearing the costs of maintaining the lining/coating,\" which is the definition proposed\nin the NPRM and the definition commonly utilized in the rail industry. In that letter, GERS requested\nalternative relief in the form of an interpretation of the new definition. See Attachment A (September\n21 Comment). I re-iterate the significant points of that letter here.\nGERS is sending the present request for interpretation because this issue has a significant impact on\nGERS' business and it is unclear whether the definition of coating/lining owner will be amended as\nrequested in GERS' September 21, 2012 public comment. Further, it is unknown when PHMSA will\ntake further action related to HM-2166 and the various comments filed by others in the industry\nfollowing the publication of the Final Rule.\nThe new definition differs from the proposed definition published in the Notice of Proposed\nRulemaking (\"NPRM\") and from the definition set forth in DOT-SP 12095. See Hazardous Materials:\nGeneral Electnc Capitol Corporation\n\n<<<PAGE 4>>>\n\nIncorporating Rail Special Permits Into the Hazardous Materials Regulations, 76 Fed. Reg. 51324, at\n51324 (Aug. 18, 2011) (\"Lining/coating owner means the person responsible for bearing the costs of\nmaintaining the lining/coating\"); DOT-SP 12095 at§ 180.503 (\"Lining/coating owner means the party\nresponsible for bearing the costs of the maintenance of the lining or coating\"). It is also inconsistent\nwith how the tank car industry has historically defined the term. See AAR Manual of Standards and\nRecommended Practices, Appendix D, § 2.1.2 (defining \"lining/coating owner\" as \"the party\nresponsible for bearing the cost of the maintenance for the lining or coating\"); Appendix U (defining\n\"lining or coating owner\" as \"the party responsible for the maintenance for the lining or coating\").\nIn addition to these inconsistencies, the inclusion of the concept of purchaser adds considerable\nambiguity to the definition of coating/lining owner. In many situations, a tank car owner will\npurchase a coating/lining when purchasing a newly manufactured tank car, and then bill back the\npurchase price of the coating/lining to its tank car lessee who is then contractually required to pay\nfor the maintenance costs associated with the coating/lining and is contractually defined as the\ncoating/lining owner. Similarly, a lessee may specify a particular coating/lining which the tank car\nowner will install in existing cars at the beginning of a lease, with the purchase price of the\ncoating/lining included in the lessee's monthly lease payments. In this situation, the lease will also\nspecify that the lessee is financially responsible for maintaining the lining/coating and is\ncontractually defined as the coating/lining owner.\nIt has been industry practice, both under DOT-SP 12095 and under AAR Appendices D and U, for the\nentity that is financially responsible for the maintenance of the coating/lining to be viewed as the\ncoating/lining owner, without consideration of who actually financed the initial purchase of the\ncoating/lining.\nIt is GERS' position that when it purchases/finances a coating/lining as part of the purchase of a\nnewly manufactured tank and then enters a lease agreement wherein the lessee is financially\nresponsible for maintaining the coating/lining and wherein the monthly lease payment was\ncalculated to include payment related to the purchase of the coating/lining, the lessee rather than\nGERS is deemed the coating/lining owner under 49 C.F.R. § 180.503. Similarly, it is GERS's position\nthat when it pays to have a coating/lining installed in an existing car at the beginning of a lease that\nobligates the lessee to bear the costs of maintaining the coating/lining, and then bills back the\npurchase cost of the coating/lining purchase and installation to the lessee as part of the lease\nagreement, the lessee rather than GERS is considered to be the coating/lining owner per 49 C.F.R. §\n180.503. Please confirm that GERS' interpretation of coating/lining owner under these facts is\ncorrect.\nGERS is also requesting an interpretation regarding which entity would be viewed as the\ncoating/lining owner based on the following scenario:\nGERS leases a coated/lined tank car to Lessee A for a ten year term. GERS finances\nthe installation of the coating/lining at the beginning of the lease. Per the lease\nagreement with Lessee A, Lessee A is financially responsible for bearing the costs of\nmaintaining integrity of the coating/lining. The cost of the coating/lining purchase is\nbilled back to Lessee A as part of Lessee A's monthly lease payments. Five years into\nthe lease term, Lessee A defaults on the lease and the tank car is returned to GERS\nwith the coating/lining intact and in good condition. GERS enters a new lease with\nLessee B. The lease with Lessee B states that Lessee B is financially responsible for\nbearing the costs of maintaining the integrity of the coating/lining.\n\n<<<PAGE 5>>>\n\nGiven that the current definition of coating/lining owner defines the owner as the person with the\nfinancial responsible for purchasing and maintaining the coating/lining, who would be defined asthe\ncoating/lining owner in the situation described above wherein the person financially responsible for\npurchasing the coating/lining and the person financially responsible for maintaining the\ncoating/lining are different people?\nIf you need further information, please let me know. I look forward to receiving PHMSA's\ninterpretation of the new coating/lining owner definition.\nVery truly yours,\nry Compliance\nCc: Karl Alexy\nEileen Edmonson\n2964163 v.l","truncated":false,"body_characters":11204}