Tuesday, March 30, 2010

PHMSA Rushes Fee Increase Rule

I just recently completed an article for the next issue of the Journal of Hazmat Transportation reviewing the public comments on the PHMSA proposed rule to increase the Hazmat registration fees for large companies (actually the wording that the NPRM used was “not qualifying as a small business or not-for-profit organization” 75 FR 5258) to support the national Hazardous Materials Emergency Preparedness (HMEP) grants program. The comment period ended on March 4th. In an unusually quick regulatory move, PHMSA published the final rule on that fee increase today. To be fair to PHMSA, they were under somewhat of a tight time constraint because they intend to impose this fee increase starting this June when the next registration period begins. Even so, 26 days from the end of the comment period to the publishing of a final rule on a controversial subject (27 supporting comments and 19 opposing comments in a shortened 30-day comment period) must be close to being some sort of bureaucratic record. They did have an advantage in making such a quick decision; they did not have to get approval of the rule from the Office of Management and Budget. While the OMB has been known to move quickly on Administration priorities, it has also been known to drag out the review process for exceedingly long times. Now most of the supporting comments for this rule came from the emergency response community (ERC). These would be the people who would be receiving the grants from the HEMP program. Since Congress tied the funding for that grant program to the Hazmat shipper/carrier registration fees, the ERC has a vested interest in keeping the funding strong by supporting the higher fees; hardly a surprising position. Now, you will have to see my article in JOHT when it comes out early next month for a detailed analysis of the negative comments, but the large shippers/carriers had three main complaints about the NPRM: the fee tripled from $1000 to $3000 per year; there was no fee increase for small shippers; and the proposed increase came after almost everyone had finalized their 2010 budgets so there was no money in budgets for the much higher fee. PHMSA responded to the complaints about the size of the fee increase, by essentially claiming that there hands were tied by Congress. The size of the grant program had been doubled and the fees had to cover the cost of the grants. The large shippers/carriers responded that they understood that, but if the 83% of the shippers/carriers that were not covered under the proposed rule had some reasonable increase imposed upon them, the size of the increase on the large shippers/carriers would certainly be more reasonable. BTW: PHMSA ‘sharpened their pencil’ on their calculations and were able to decrease to fee increase to only $2600 [I corrected this value from $2500 at 7:50 EDT on 03-30-10] in today’s final rule. PHMSA’s response to that has been straightforward in both the NPRM and in today’s final rule. They maintain that although “there are exceptions, small businesses and not-for-profit organizations generally offer for transportation or transport fewer and smaller hazardous materials shipments as compared to larger companies” (75 FR 15616). Unfortunately there were comments from two smaller carrier support organizations that directly contradicted this claim. For example the Petroleum Marketers Association of America reported in their comment that they represent “approximately 8,000 independent small business petroleum marketers nationwide”; almost everyone of their shipments are placarded hazmat loads. Likewise the New England Fuel Institute reported in their comment that their memebership was “nearly 1,000 marketers of quality heating oil, kerosene, diesel fuel, and other petroleum products in the Northeast, many of whom operate small bulk plant facilities”; again almost all loads would be hazmat. So, is there an alternative reason why PHMSA would not want to raise the registration fees for small businesses? Well, if I recall correctly, any rule that has a significant financial impact on small businesses requires additional justification and review of that justification by the Office of Management and Budget. Now I don’t know anyone at PHMSA, nor have I talked to anyone that works there, but I would be willing to bet that a substantial reason for the lack of a small business rate increase is the ability for PHMSA to get this late filed rule through the process quickly by bypassing the requirement for OMB review. Maybe not the sole reason, but a substantial portion of the real reason; that’s my bet.

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