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Federal Register / Vol. 70, No.

114 / Wednesday, June 15, 2005 / Proposed Rules 34729

coverage of the rule or any part thereof DEPARTMENT OF TRANSPORTATION Instructions: You must include the
for small entities. agency name (Pipeline and Hazardous
Pipeline and Hazardous Materials Materials Safety Administration) and
19. The objective in the Refarming
Safety Administration the Docket number (PHMSA–02–11989
proceeding was to provide a means to
transition licensees to 6.25 kHz (HM–224C)) or the Regulatory
49 CFR Parts 171, 172, 173, and 175 Identification Number (RIN 2137–AD48)
technology. Migration to 12.5 kHz
[Docket No. PHMSA–02–11989 (HM–224C)] for this rulemaking at the beginning of
technology was viewed as a stepping
your comments. You should submit two
stone to operation at 6.25 kHz RIN 2137–AD48 copies of your comments if you submit
technology. However, requiring the use them by mail. If you wish to receive
of 6.25 kHz technology by a date certain Hazardous Materials; Transportation of
confirmation that PHMSA received your
could impact some small entities Lithium Batteries
comments, you must include a self-
requiring them to upgrade their AGENCY: Pipeline and Hazardous addressed stamped postcard. Note that
communications systems before they Materials Safety Administration all comments received will be posted,
would otherwise do so. An alternative (PHMSA), DOT. without change, to http://dms.dot.gov
would be to maintain the current rules, ACTION: Initial regulatory flexibility including any personal information
which are intended to foster migration analysis. provided and will be available to
to narrowband technology by way of internet users. Please see the Privacy
progressively more stringent type SUMMARY: The Pipeline and Hazardous Act section of this document.
certification requirements. We issue this Materials Safety Administration Docket: For access to the docket to
3rd Further NPRM to stay the (PHMSA) is publishing this initial read background documents and
effectiveness of § 90.203(j)(5) of the regulatory flexibility analysis to aid the comments received, go to http://
Commission’s rules and thereby ensure public in commenting upon the dms.dot.gov at any time or to Room PL–
potential small business impacts of the 401 on the plaza level of the Nassif
that a January 1, 2005 deadline would
proposals in our April 2, 2002 notice of Building, 400 Seventh Street, SW.,
not injure any party while we consider
proposed rulemaking to amend the Washington, DC between 9 a.m. and 5
whether a change in the Commission’s requirements in the Hazardous
rules would benefit small entities and p.m., Monday through Friday, except
Materials Regulations (HMR) on: (1) Federal holidays.
other PLMR licensees. Exceptions for ‘‘small’’ and for ‘‘mid-
FOR FURTHER INFORMATION CONTACT: John
Federal Rules That May Duplicate, size’’ batteries (i.e., cells up to 5 grams
Gale, Office of Hazardous Materials
Overlap, or Conflict With the Proposed of lithium content and batteries up to 25
Standards, PHMSA, Department of
Rules grams of lithium content); and (2)
Transportation, 400 Seventh St., SW.,
exceptions for aircraft passengers and
Washington, DC 20590–0001,
None. crew. These changes are being proposed
Telephone (202) 366–8553.
in order to clarify requirements to
III. Ordering Clauses promote safer transportation practices; SUPPLEMENTARY INFORMATION: In our
promote compliance and enforcement; April 2, 2002 notice of proposed
20. Pursuant to sections 1, 2, 4(i), 301, rulemaking (NPRM) under this docket
eliminate unnecessary regulatory
302, and 303 of the Communications (67 FR 15510), the Research and Special
requirements; facilitate international
Act of 1934, as amended, 47 U.S.C. 151, Programs Administration (RSPA)—
commerce; and make these
152, 154(i), 301, 302, and 303, and requirements easier to understand. We PHMSA’s predecessor agency—
§§ 1.421 and 1.425 of the Commission’s will consider comments received to explained that lithium batteries and
rules, 47 CFR 1.421 and 1.425, it is improve our regulatory flexibility equipment containing or packed with
ordered that the Third Further Notice of analysis and in making our decision on lithium batteries are regulated as Class
Proposed Rule Making is hereby a final rule. 9 materials unless they meet an
adopted. DATES: Written comments must be exception in the Hazardous materials
21. It is further ordered that the received on or before August 1, 2005. Regulations (HMR, 49 CFR Parts 171–
Commission’s Consumer Information 180). In that NPRM, RSPA proposed (1)
ADDRESSES: You may submit comments
changes to test methods for lithium
Bureau, Reference Information Center, (identified by DOT DMS Docket Number
PHMSA–02–11989 (HM–224C)) by any batteries, (2) that excepted ‘‘small’’
shall send a copy of this Third
of the following methods: batteries must be tested and each
Memorandum Opinion and Order, package containing more than 24 cells
Third Further Notice of Proposed Rule • Web site: http://dms.dot.gov.
Follow the instructions for submitting or 12 batteries must meet packaging
Making including the Initial Regulatory standards, including a maximum gross
Flexibility Analysis, to the Chief comments on the DOT electronic docket
site. mass, and have certain communication
Counsel for Advocacy of the U.S. Small of the hazards (marking and
• Fax: 202–493–2251.
Business Administration. • Mail: Docket Management Facility; accompanying documentation), (3)
List of Subjects in 47 CFR Part 90 U.S. Department of Transportation, 400 elimination of the exception for ‘‘mid-
Seventh Street, SW., Nassif Building, size’’ cells and batteries, and (4)
Communications equipment, Radio, PL–401, Washington, DC 20590–0001. exceptions for airline passengers and
Reporting and recordkeeping • Hand Delivery: Room PL–401 on crew members to carry consumer
requirements. the plaza level of the Nassif Building, electronic devices and spare batteries
400 Seventh Street, SW., Washington, aboard aircraft, subject to limits on the
Federal Communications Commission.
DC, between 9 a.m. and 5 p.m., Monday lithium content and number of spare
Marlene H. Dortch, through Friday, except Federal holidays. batteries.
Secretary . • Federal eRulemaking Portal: Go to Our April 2, 2002 NPRM did not
[FR Doc. 05–11476 Filed 6–14–05; 8:45 am] http://www.regulations.gov. Follow the include an initial regulatory flexibility
BILLING CODE 6712–01–P online instructions for submitting analysis (IRFA) pursuant to the
comments. Regulatory Flexibility Act (5 U.S.C. 603)

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34730 Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules

because we concluded that the proposed HMR to (1) prohibit the transportation regulations pertaining to the
changes would not have a significant of primary (non-rechargeable) lithium transportation of lithium batteries and
economic impact on a substantial batteries and cells as cargo aboard cells are insufficient to prevent
number of small entities (5 U.S.C. 605). passenger-carrying aircraft, (2) adopt potentially serious incidents resulting
We concluded that the costs associated conditions under which equipment from damage to these batteries and cells.
with testing ‘‘small’’ lithium batteries containing or packed with primary The potential for fires that are difficult
would be incurred by lithium battery lithium batteries and cells may be to extinguish from such incidents was
manufacturers, which are not small transported aboard passenger-carrying discussed in the preamble to the
businesses. We also concluded that aircraft, and (3) require that packages of proposed rule, which described two
most small businesses that offer lithium small and mid-size primary lithium
fires involving lithium batteries (67 FR
batteries for transportation would make batteries and cells (that are excepted
15511). Changes to the international
smaller shipments (fewer than 24 cells from Class 9) must be marked ‘‘Primary
regulations concerning the
or 12 batteries) of ‘‘small’’ batteries and Lithium Batteries—Forbidden for
would not have to meet the packaging Transport Aboard Passenger Aircraft’’ transportation of lithium batteries and
and hazard communication when transported by highway, rail, cells, particularly the United Nations
requirements. vessel, or cargo aircraft. The IFR also Recommendations on the Transport of
Comments to the proposed rule provides that lithium batteries are not Dangerous Goods (UN
indicated that some lithium battery eligible for the ‘‘small quantity’’ Recommendations), were adopted to
manufacturers are small businesses and exception in 49 CFR 173.4, but that address these safety issues. As a result,
that the small shipment exception may airline passengers and crew members the HMR is now inconsistent with the
not sufficiently mitigate their burden. may carry consumer electronic and UN Recommendations and, thus, makes
On August 22, 2003, the Office of medical devices containing lithium cells it more difficult to transport these
Management and Budget returned or batteries, and spare batteries, in their materials in international commerce.
RSPA’s draft final rule in this carry-on or checked baggage, up to a Succinct statement of the objectives
proceeding stating that, after maximum lithium content of each cell of, and legal basis for, the proposed
discussions with the Small Business and each battery. The prohibition and rule.
Administration, it believed that a full restrictions adopted in this IFR apply to
IRFA should be prepared containing both foreign and domestic passenger- The proposed rule will improve the
‘‘additional information that will allow carrying aircraft entering, leaving, or safety of transportation of lithium
RSPA to more fully address comments operating in the United States and to batteries and cells by changing the test
disputing the need for regulating persons offering primary lithium methods for lithium batteries, revising
lithium ion batteries,’’ with ‘‘as much batteries and cells for transportation on the exceptions for small batteries,
detail as possible on their cost any passenger-carrying aircraft. Aside eliminating an exception for larger
estimates,’’ and also to ‘‘gather the exception for electronic devices and batteries, adding exceptions for aircraft
additional information on the number of spare batteries in airline passenger and passengers and crew, and making
small businesses impacted and their crew member baggage, the provisions editorial changes to clarify the
annual revenues.’’ Thereafter, RSPA adopted in the IFR do not apply to requirements.
performed a threshold analysis and secondary (rechargeable) lithium To further clarify and describe these
determined that at least 52 small batteries (e.g., lithium ion batteries). changes, we have proposed to define
businesses could be affected by the In a separate rulemaking proceeding,
small, mid-size, and large categories for
proposed rule and that this number the revised UN test methods for lithium
could increase as the market for lithium batteries were adopted in the HMR. lithium batteries and cells, as shown in
batteries and cells increases. Based on Docket No. PHMSA–04–17036 (HM– Table 1, where Li means Lithium and
the threshold analysis we concluded 215G), 69 FR 76043 (Dec. 20, 2004). For ELC means equivalent lithium content.
that this IRFA was required because the these reasons, this IRFA does not Equivalent lithium content means, for a
proposed rule may have significant address the changes proposed in the lithium ion cell, the product of the rated
economic impact on a substantial April 2, 2002 NPRM concerning test capacity, in ampere-hours, of a lithium
number of small businesses. methods or the exception for electronic ion cell times 0.3. The equivalent
In an interim final rule (IFR) devices. lithium content of a battery equals the
published December 15, 2004, under Description of the reasons that action sum of the grams of equivalent lithium
Docket No. PHMSA–04–19886 (HM– by the agency is being considered. contents contained in the component
224E, 69 FR 75208), we amended the PHMSA believes that the current cells of the battery.

TABLE 1.—BATTERY AND CELL CATEGORY DEFINITIONS


Small Large
Mid-size
(no more (more
(between)
than) 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 1. Revise the exception for small a. Require testing of small batteries
specific changes to the HMR: batteries. formerly excepted under the HMR

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Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules 34731

according to the UN Manual of Tests • Except in the case of lithium cells top computers, camcorders, etc.)
and Criteria. or batteries packed with or contained in brought onboard an aircraft by
b. When a package contains more than equipment, in packages not exceeding passengers and crew. Also except from
24 cells or 12 batteries, except when 30 kilograms (gross weight). the HMR passengers and crew carrying
installed in equipment, small batteries 2. Remove the exception associated spare batteries for consumer electronic
must meet the following packaging and with the shipment of mid-size batteries, devices containing lithium or lithium
shipping requirements: so that these batteries and cells must be ion cells or batteries subject to quantity
shipped as Class 9 hazardous materials. and lithium content limits when carried
• The package must be marked to
The requirement to transport mid-size by passengers or crew member for
indicate that it contains lithium
batteries and cells as Class 9 hazardous personal use. Each spare battery must be
batteries, and that special procedures
materials will not subject the batteries to individually protected so as to prevent
should be followed in the event that the
any additional testing; however, short circuits and carried in carry-on
package is damaged;
employees who are involved with any baggage only. In addition, each spare
• The package must be accompanied aspect of their transportation (including battery must not exceed the following:
by a document indicating that the preparing shipping papers) would be (i) For a lithium metal or lithium alloy
package contains lithium batteries and now considered hazmat employees and battery, a lithium content of not more
that special procedures should be would be subject to the applicable than 2 grams per battery; or
followed in the event that the package training requirements under the HMR. (ii) For a lithium ion battery, an
is damaged; Additionally, these shipments would aggregate equivalent lithium content of
• The package must be capable of have to be made in UN performance- not more than 8 grams per battery,
withstanding a 1.2 meter drop test in oriented packagings and marked, except that up to two batteries with an
any orientation without damage to cells labeled, and described on shipping aggregate equivalent lithium content of
or batteries contained in the package, papers in accordance with the HMR. more than 8 grams but not more than 25
without shifting of the contents that 3. Except from the HMR consumer grams may be carried.
would allow short circuiting and electronic devices (watches, calculating These changes are summarized in
without release of package contents; and machines, cameras, cellular phones, lap- Table 2.

TABLE 2.—SUMMARY OF REQUIREMENTS BY BATTERY AND CELL CATEGORY


Small Mid-size Large

Testing .............. Will be subject to UN Testing requirements ................ No change ....................................................................


Shipping ............ Packages of more than 24 cells or 12 batteries (ex- Now subject to HMR as Class 9 (only required old No change.
cept when installed in equipment) have new integ- UN Tests before).
rity and communication requirements.
Revise exceptions for passengers and crew for carrying consumer electronic devices and spare batteries

Description of and, where feasible, an lithium batteries and cells. For this 4. Lexis-Nexis search ‘‘manufactures
estimate of the number of small entities analysis, we identified 109 businesses lithium batteries’’
to which the proposed rule will apply. potentially affected by the proposed 5. Thomas Register at http://
In recent years, the lithium battery rule. Of these 109 businesses, 60 were www.thomasregister.com/
industry has undergone a identified as small businesses based on 6. Dun & Bradstreet financial and
transformation from one serving a small, the size standards developed by the other reports (through Westlaw)
niche-driven market to a rapidly Small Business Administration and
growing industry powering equipment codified in 13 CFR 121.201. These small 7. Dun & Bradstreet financial and
in a broad range of sectors (e.g., military, businesses were identified using a other reports (through Electronics
manufacturing and medical), and being number of sources: Business on-line)
used in a variety of consumer 1. Energy source guides at http:// 8. Hoover’s company database
electronics, including: laptop energy.sourceguides.com/businesses/ 9. Information Access company
computers, communications equipment, byP/batP/batt/btora/bType/lion/byB/ database
and entertainment products. Primary or mfg/byN/byName.shtml and http:// 10. Reference USA
non-chargeable batteries are used to energy.sourceguides.com /businesses/
power a number of electronics and other 11. US business directory
byP/batP/batt/byB/mfg/byN/ 12. Disclosure incorporated database
high-tech products, including digital byNameWeb.shtml
cameras, memory backup circuits, 13. PR newswire
security devices, calculators, and 2. Batteries EZ Search at http://
www.industrialbatteries-ez.com/ 14. Mergent Inc. reports
watches. Rechargeable or secondary
industrialbatteries/ 15. Investext group
lithium ion batteries are used in laptop
computers, camcorders, cell phones, 0028713_0028679_1.html 16. Corporate websites
and other portable electronic devices. 3. Portable Rechargeable Battery Table 3 presents the number of small
The proposed rule would regulate the Assocation (PRBA) Member List at businesses impacted by the proposed
transportation of primary and secondary http://www.prba.org/member.html rule for each industry.

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34732 Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules

TABLE 3.—NUMBER OF IMPACTED SMALL BUSINESSES BY NAICS CODE


Number
Industries NAICS code of small
businesses

Bare Printed Circuit Board Manufacturing ............................................................................................................... 334412 1


Other Electronic Component Manufacturing ........................................................................................................... 334419 3
Electromedical and Electrotherapeutic Apparatus Manufacturing .......................................................................... 334510 1
Other Lighting Equipment Manufacturing ................................................................................................................ 335129 1
Storage Battery Manufacturing ................................................................................................................................ 335911 21
Primary Battery Manufacturing ................................................................................................................................ 335912 8
All Other Miscellaneous Electrical Equipment and Component Manufacturing ...................................................... 335999 7
Surgical and Medical Instrument Manufacturing ..................................................................................................... 339112 2
Surgical Appliance and Supplies Manufacturing ..................................................................................................... 339113 1
Electrical Apparatus and Equipment, Wiring Supplies, and Related Equipment Merchant Wholesalers .............. 423610 8
Other Electronic Parts and Equipment Merchant Wholesalers ............................................................................... 423690 4
Industrial Supplies Merchant Wholesalers .............................................................................................................. 423840 1
Research and Development in the Physical, Engineering, and Life Sciences ....................................................... 541710 2

Total .................................................................................................................................................................. ........................ 60

Approximately one-third of all small percent) only manufacture batteries and businesses identified for this
businesses identified are in NAICS 18 (30 percent) exclusively distribute examination totals roughly $681 million
335911, Storage Battery Manufacturing. batteries manufactured by other annually. There were nine small
Primary Battery Manufacturing, NAICS companies. businesses contacted to examine the
335912, is among the next largest We believed that electronic potential impact of the proposed rule on
categories of small businesses. Most of equipment distributors would also be their operations. The annual revenue of
the businesses in these two categories impacted by this proposed rule and these nine businesses impacted by the
are likely to have a significant portion contacted the Electronic Industries NPRM totals approximately $217.1
of their business related to lithium- Alliance. However, they indicated that million, or 31.9 percent of the total.
based products. Two of the firms that their industry is comprised primarily of Annual revenues among all 60 small
were contacted indicated that the large businesses. businesses range from a low of $100,000
lithium battery/cell business was a very The many of the small businesses to a high of $98.7 million. As shown, 47
small component of their overall impacted by this analysis described percent of the small businesses generate
business and that, while they have themselves as ‘‘value-added’’ businesses less than $5 million in annual revenue,
entered that market in anticipation of its offering custom-designed batteries at while 65 percent generate less than $10
growth, they would abandon the lithium relatively low-volumes to long-time million. Of the nine small businesses
battery/cell market if the compliance military, medical, original equipment contacted, the sales-weighted before-tax
costs increased significantly. manufacturers (OEMs) and high-tech profit margin was approximately 21
Many of the small businesses customers. Typically, the small percent. Applying the 21 percent before-
identified in this IRFA both businesses were purchasing cells from tax profit margin to the annual revenue
manufacture battery packs and foreign sources and assembling them estimates noted previously generates an
distribute batteries manufactured by into packs for customers. Batteries estimated $145 million of before-tax
other companies. A total of 24 offered by these small businesses tend profit for the small businesses affected
companies (40 percent) both to be more complex with higher quality by the proposed rule. Among the small
manufacture and distribute battery and reliability standards, according to businesses examined in this IRFA, the
packs. Battery manufacturing, as the respondents. These small businesses average before-tax profit is, therefore,
applied in this context, entails the also develop computer and other estimated at $2.4 million annually.
packaging or assemblage of cells consumer electronic batteries for ‘‘after- Note, however, that these businesses do
manufactured primarily from foreign market’’ sales. not focus entirely on the manufacturing
sources into custom packs designed to Table 4 stratifies the small businesses and distribution of lithium batteries.
meet specific customer demands. Of the according to annual revenue. The Thus, only a fraction of these profits are
60 small business identified, 18 (30 annual revenue of the 60 small attributable to lithium batteries.

TABLE 4.—SMALL BUSINESS SIZE BY ANNUAL SALES


Number Percentage Cumulative
Annual sales of small of small percentage
businesses businesses

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

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Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules 34733

TABLE 4.—SMALL BUSINESS SIZE BY ANNUAL SALES—Continued


Number Percentage Cumulative
Annual sales of small of small percentage
businesses businesses

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 company with the highest number had majority of these businesses (85 percent)
according to their number of employees. 233 employees. The majority of the have fewer than 100 employees.
The company with the lowest number of small businesses (64 percent) have
employees had two employees and the fewer than 50 employees and the vast

TABLE 5.—SMALL BUSINESS SIZE BY NUMBER OF EMPLOYEES


Number Percentage Cumulative
Number of employees of small of small percentage
businesses businesses

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, skills necessary for preparation of the shipping of both prototypes and final
recordkeeping, and other compliance report or record. products, and the training required for
requirements of the proposed rule, The compliance costs to small employees newly classified as hazmat
including an estimate of the classes of businesses subject to the provisions in employees. Each of these will be
small entities that will be subject to the the proposed rule are primarily related discussed separately. Additionally, we
requirement and the type of professional to testing battery and cell designs, will discuss the extent to which these

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34734 Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules

additional compliance costs can be batteries according to the 8 step a tested type by a change of no more
passed on to the small businesses’ approach in the UN Manual of Tests and than 0.1 gram or 20 percent by mass,
customers. Criteria. Estimated testing costs used for whichever is greater) or (b) they will be
this IRFA are those charged by outside manufactured in production runs of
Testing
testing laboratories because virtually all fewer than 100 batteries. The costs
Based on the information presented in of the small companies send their associated with testing batteries falling
the NPRM, threshold analysis, batteries to outside laboratories. The into these categories were excluded
regulatory evaluation and industry cost to test a particular design prototype from the analysis.
comments, testing requirements would ranges from approximately $5,000 to The costs associated with testing new
be affected in the following manner. $8,000. Testing cost estimates are based battery designs designated for
1. The rule would remove the small on input provided by one independent international shipment were also
battery exception to testing testing laboratory (Motorola) and excluded from the analysis. The basis of
requirements. The following exceptions contacting nine businesses. These costs this exclusion is that lithium batteries
would be removed from the HMR, thus do not include the costs of supplying that are manufactured within the U.S.
requiring that batteries falling into the the test batteries (up to 24 for but subsequently transported by aircraft
categories outlined below be tested in rechargeable batteries) or the cost of to foreign destinations are already
accordance with the UN Manual of shipping the prototypes to the testing transported in accordance with the
Tests and Criteria. lab. The primary reason for this is that ICAO Technical Instructions, which
• Liquid cathode cell—no more than the tests are already required for any have adopted the U.N. test standards.
0.5 grams of alloy per cell cell or batteries that are shipped Thus, harmonization with the
• Liquid cathode battery—no more internationally. international standards would not
than 1 gram of lithium or lithium alloy
The major incremental cost under the impose any marginal costs on
• Solid cathode cell—no more than 1
proposed regulation for the small businesses engaged in the international
gram of lithium or lithium alloy per cell
• Solid cathode battery—no more producers of lithium batteries and cells transport of lithium batteries.
than 2 grams of lithium or lithium alloy will result from the required testing of Table 6 shows the number of existing
• Lithium ion cell—no more than 1.5 small batteries. To determine the designs subject to testing over the two-
grams of equivalent lithium content number of new design types requiring year period following the effective date
• Lithium ion battery—no more than testing, a series of questions were posed of the proposed rule as well as the
8 grams of equivalent lithium content to nine businesses. First, respondents number of new designs that would
2. Exceptions to the battery testing were asked to estimate the number of require testing over a 5-year period for
requirements would include: total new designs that would be tested the contacted businesses. As noted
• Batteries and cells that differ from this year and how they expected this previously, the nine contacted small
a tested type by a change of no more number to change in the next five years. businesses comprise an estimated 31.9
than 0.1 gram or 20 percent by mass, Respondents were asked to categorize percent ($217.1 million/$681.1 million)
whichever is greater. the new design types according to size of all small businesses affected by the
• Batteries that are of a design similar (small, mid-size, large) and type proposed rule in annual revenues. Thus,
to one that has been previously tested (primary, rechargeable). Contacted to expand these results to the entire
under UN standards and contain businesses were then asked to estimate population of small businesses, an
lithium content less than the original the fraction of the new design types that expansion factor of 3.1 ($681.1 million/
design. could potentially be considered exempt $217.1 million) was used to estimate the
3. At present, small battery and cell due to the following reasons: (a) They total number of designs requiring testing
manufacturers and distributors are are nearly identical to existing designs among all small businesses and these
required to test all mid-size and larger (e.g., batteries and cells that differ from 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 designs
Small Mid-size Large 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 production and shipping costs are the shipping costs for a package of 20 one-
reflect the costs for low- and high-end same for both estimates. The production pound batteries to Motorola’s Georgia
estimates of $5,000 and $8,000 per test, costs assume that an average of 20 testing location from New York City,
respectively. The costs for these batteries is required for testing each Orlando, and Los Angeles. A certified
scenarios are shown in Tables 7 and 8. design and that each battery produced packaging weighing two pounds and
There are no testing costs for mid-size for testing costs approximately $50. The costing $5 was assumed and FedEx’s
and large batteries because they are shipping costs were determined by $30 hazmat surcharge was included in
already required to be tested. The averaging the FedEx Express 2-day the shipping cost estimate.

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TABLE 7.—ANNUAL COSTS OF COMPLYING WITH TESTING REQUIREMENTS


[Low-end estimate]

New designs
Previous Discounted
Year Production Shipping Total
designs total
Small Mid-size Large

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
Previous Discounted
Year Production Shipping Total
designs total
Small Mid-size Large

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 eliminate one of these exceptions, • Total quantity of hazardous
incremental cost for the low-end requiring mid-size batteries and cells to materials
estimate over a five-year period for all be shipped as Class 9 materials. In • Page number and total number of
60 small businesses would be addition, new packaging integrity and pages
$21,549,368, discounted at 7 percent per communication requirements now • Emergency telephone number
year, while the discounted average apply to small batteries and cells • Shipper’s certification
annual cost would be $4,309,874.1 For shipped in packages of more than 12 • Signature (Must be legibly signed
the high-end estimate shown in Table 8, batteries or 24 cells, except when by a principal, officer, partner, or
the incremental discounted cost over a installed in equipment. employee of the shipper or his agent)
five-year period would be $32,193,660 To ship lithium cells and batteries as Based on the wide-ranging cost
while the discounted average annual Class 9 hazardous materials, estimates gathered from interviewing
cost would be $6,438,732. An average transporters must meet the following selected small businesses for the
annual discounted cost over the five- requirements: additional shipping costs for lithium
year period for the averaged low- and 1. Packaging: Use only packaging that batteries and cells under the proposed
high-end estimates would be about meets Packing Group II performance rules, we adopted estimates for:
$5,374,303 for the same companies. standards. (Packing must not exceed 5 (a) The increased cost to ship small
For each company there would be an kg (gross weight) for passenger aircraft batteries and cells under the proposed
estimated incremental discounted cost and must not exceed 35 kg (gross rules,
of approximately $71,831 annually for weight) for cargo aircraft. (b) The increased cost to ship mid-
the low-end testing costs and about 2. Marking: The following markings sized cells as Class 9 materials, and
$107,312 average for the discounted must be applied to the packaging: (c) The increased cost to ship mid-
high-end testing costs over the five-year • Shipping name: Lithium batteries sized batteries as Class 9 materials.
period. The average annual estimated • Identification Number: UN 3090 These estimates were primarily
discounted testing cost per company • Shipper’s Name and Address developed from detailed data provided
using the averaged high- and low-end • Name and address of company or from a single small business; however,
costs would be approximately $89,572. individual receiving batteries they were deemed to be reasonable
Shipping • UN Specification Certification average costs considering the varying
3. Labeling: The Class 9 label must be estimates provided by other small
Currently, under 49 CFR 173.185, used. businesses with somewhat lesser detail.
lithium batteries and cells are required 4. Train personnel. These costs are $0.05 for each small
to be shipped as Class 9 hazardous 5. Shipping Papers: The following battery and cell, $0.261 for each mid-
materials with certain significant information must be included on sized cell, and $0.313 for each mid-size
exceptions. The proposed rules would shipping papers: battery.
1 Annual costs are presented in present value
• Proper shipping name, hazard class, Table 9 shows the total number of
terms based on a real discount rate of 7 percent as
identification number, and packing batteries and cells in normal production
prescribed in the Office of Management and Budget group runs (production units) that are
Circular A–94. • Number and type of packages expected to be shipped to customers

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and also illustrates how the final determined for the base year of the
production shipping costs were analysis (2004).

TABLE 9.—PRODUCTION UNITS SHIPPED TO CUSTOMERS AND INCREMENTAL SHIPPING COSTS FOR 2004
Incremental Incremental Adjusted incre-
Type Units shipped unit cost cost mental cost

Cells:
Primary Lithium:
Small .................................................................................................. 802,800 0.05 40,140 125,901
Mid-size ............................................................................................. 7,132 0.261 1,861 5,839
Large ................................................................................................. 128 0.0 0 0
Lithium Ion:
Small .................................................................................................. 0 0.0 0 0
Mid-size ............................................................................................. 0 0.0 0 0
Batteries:
Primary Lithium:
Small .................................................................................................. 1,065,464 0.05 52,273 167,094
Mid-size ............................................................................................. 1,104,944 0.313 345,847 1,084,765
Large ................................................................................................. 3,744 0.0 0 0
Lithium Ion:
Small .................................................................................................. 1,322,444 0.05 66,122 207,395
Mid-size ............................................................................................. 305,500 0.313 95,622 299,921

Total ................................................................................................... ........................ ........................ 602,866 1,890,913

Table 10 shows the total annual reflect the costs for all 60 small $2,183,222 per year. On a discounted
shipping costs for production deliveries businesses and then discounted using a annual basis, each small business would
of lithium batteries and cells to 7 percent discount rate. The discounted be expected to incur $36,387 in
customers of the small businesses for costs for the five-year analysis period additional shipping costs to comply
which shipment quantities were are $10,916,110, which equates to a with the proposed rules.
obtained. These costs were adjusted to discounted annual average of

TABLE 10.—ANNUAL INCREMENTAL SHIPPING COSTS TO CUSTOMERS


Production runs
Discounted
Year Total
Incremental Adjusted incre- total
cost mental cost

2004 ................................................................................................................. 602,866 1,890,913 1,890,913 1,890,913


2005 ................................................................................................................. 691,466 2,168,812 2,168,812 2,026,927
2006 ................................................................................................................. 793,088 2,487,552 2,487,552 2,172,725
2007 ................................................................................................................. 909,645 2,853,137 2,853,137 2,329,010
2008 ................................................................................................................. 1,043,331 3,272,450 3,272,450 2,496,536

Total .......................................................................................................... ........................ ........................ ........................ 10,916,110


Average Annual ................................................................................. ........................ ........................ ........................ 2,183,222
Average Annual/Company ................................................................. ........................ ........................ ........................ 36,387

Training response and protective measures. —The most recent training completion
As mentioned previously, lithium Hazmat training must: date,
batteries and cells are now required to • Take place before the employee can —A description, copy or location of the
be shipped as a Class 9 hazardous work with hazardous materials. training materials,
material with certain significant Exceptions: The employee works under —The name and address of the person
exceptions. The proposed rules would the direct supervision of a trained providing the training, and
eliminate one of these exceptions, employee and the training is completed —Certification that the employee has
requiring all mid-size batteries and cells within 90 days of their hire or transfer been trained and tested.
to be shipped as Class 9 materials. One into the job. All small companies that ship lithium
of the requirements for shipping lithium • Be done at least every three years batteries or cells as Class 9 hazardous
batteries and cells as a Class 9 for all hazmat employees. Training done materials must train hazmat employees
hazardous material is that all hazmat by another employer can be used to in accordance with the provisions of the
employers must ensure that their meet these requirements. HMR. Based on the data conducted for
hazmat employees receive training in • Be maintained for each employee this IRFA, all of the small battery
general awareness of hazmat regulatory for at least the past three years and for companies were assumed to be shipping
requirements, function-specific training at least 90 days after the end of the some batteries as Class 9 hazmat. This
related to the material they are employee’s employment. This record means that each company currently has
handling, security awareness training must include: a cadre of hazmat-trained employees
and safety training including emergency —The employee’s name, and has therefore already made a

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considerable financial investment in approaches, the research conducted for employees per company based on
employee training. this IRFA indicates that the total costs contacted businesses), the average
Two different approaches have been to train one hazmat employee is annual cost per small business is $242.
used by small companies to train their approximately the same for both To illustrate the costs associated with
employees. The first approach is to hire approaches. However, this analysis is training employees, one of the three
an outside expert to visit the company focused on incremental costs businesses sharing detailed training cost
periodically (perhaps every two years) represented by the need for small
and present training on current and information noted that it pays an
businesses to provide hazmat training to experienced external trainer $1,500 to
proposed changes to the hazmat any additional employees needed to
regulations. The employees who attend teach a detailed six-hour class on the
handle lithium batteries or cells that handling of hazardous materials. There
these sessions would typically be
would newly be classified as hazmat as are six employees in attendance, whose
trained as trainers and they, in turn,
a result of the proposed regulations. As average pay is $15/hour. With an
would train other workers as needed.
The second approach to training is for Table 11 shows, the estimated average fringe benefit rate of 28.1
a company to select one employee as incremental discounted cost for training percent, total labor costs associated with
their training expert. This employee over a five-year period for all 60 small class attendance is $692.2 A human
would be exposed to a periodic (every businesses would be $72,565 while the resources manager is charged with all
two years) specialized off-site course average annual discounted cost would data entry and recordkeeping
providing expert training in hazardous be about $14,513. This cost is based on requirements associated with hazardous
materials. The trained employee returns an estimated cost to train one hazmat material training and certification. The
to their company and trains other employee of about $352, computed as recordkeeping cost is $154 ($20/hour @
employees by conducting a series of the average of the estimates from three 6 hours + fringe benefits). The total cost
hazmat training sessions. small businesses. Considering that to train these six employees is $2,346
Although costs differ for the various slightly less than one employee per and the average cost per employee is
elements of these two training company needs additional training (0.83 $391.

TABLE 11.—ANNUAL INCREMENTAL TRAINING COSTS


Employees Additional em- Incremental Adjust. incre- Discounted
Year with ployees requir- cost mental cost total
certification ing certification

2004 ..................................................................................... 376 15 5,273 12,923 12,923


2005 ..................................................................................... 426 17 5,970 14,630 13,673
2006 ..................................................................................... 482 19 6,759 16,563 14,467
2007 ..................................................................................... 546 22 7,652 18,752 15,307
2008 ..................................................................................... 618 25 8,663 21,229 16,195

Total .............................................................................. ........................ ........................ ........................ ........................ 72,565


Average Annual ..................................................... ........................ ........................ ........................ ........................ 14,513
Average Annual/Company ..................................... ........................ ........................ ........................ ........................ 242

Summary of Costs Testing is by far the dominant added account for 35 and 26 percent,
cost that would be mandated by the respectively, of the total low- and high-
The incremental costs incurred by proposed regulation account for 66 end cost estimates. In both estimates,
small businesses to implement the percent of total costs in the low-end training costs are approximate 0.2
regulations in the proposed rule are estimate and 74 percent of total costs in percent of total costs.
summarized in Tables 12 and 13. the high-end estimate. Shipping costs
TABLE 12.—SUMMARY OF COSTS TO SMALL BUSINESSES
[Low-end estimate]

Year Testing Training Shipping Total Discounted

2004 ..................................................................................... $7,031,004 $12,923 $1,890,913 $8,934,839 $8,934,839


2005 ..................................................................................... 7,309,907 14,630 2,168,812 9,465,221 8,846,001
2006 ..................................................................................... 2,781,439 16,563 2,487,552 5,221,448 4,560,615
2007 ..................................................................................... 3,135,975 18,752 2,853,137 5,898,286 4,814,759
2008 ..................................................................................... 3,535,702 21,229 3,272,450 6,662,887 5,083,085

Total .............................................................................. 23,794,026 84,097 12,672,863 36,182,682 32,239,299


Average Annual ..................................................... ........................ ........................ ........................ ........................ 6,447,860
Average Annual per Company .............................. ........................ ........................ ........................ ........................ 107,464

2 Fringe benefits data based on Bureau of Labor


Employer Cost for Employee Compensation, Total
Benefits, Private Industry All Workers.
Statistics, National Compensation Survey,

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34738 Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules

TABLE 13.—SUMMARY OF COSTS TO SMALL BUSINESSES


[High-end estimate]

Year Testing Training Shipping Total Discounted

2004 ..................................................................................... $10,503,962 $16,540 $1,890,913 $12,407,798 $12,407,798


2005 ..................................................................................... 10,920,630 18,971 2,168,812 13,075,943 12,220,508
2006 ..................................................................................... 4,155,328 21,759 2,487,552 6,595,337 5,760,623
2007 ..................................................................................... 4,684,987 24,957 2,853,137 7,447,298 6,079,214
2008 ..................................................................................... 5,282,158 28,625 3,272,450 8,409,344 6,415,448

Total .............................................................................. 35,547,064 110,853 12,672,863 47,935,720 42,883,590


Average Annual ..................................................... ........................ ........................ ........................ ........................ 8,576,718
Average Annual per Company .............................. ........................ ........................ ........................ ........................ 142,945

Examining the midpoint between the 5.2 percent of annual revenues and consumers under the proposed rule is
low- and high-end estimates, the total profits, respectively. not known.
cost over the five-year analysis period Description of any significant
Competitive Impacts of the Rule on
(in current dollars) for all 60 small alternatives to the proposed rule that
Small Businesses
businesses is $37,561,444. On an annual minimize significant economic impacts
basis, this is $7,512,289 and it equates The question of who bears the costs on small entities while accomplishing
to an average cost per company per year associated with the proposed rule is the agency’s objectives. The proposed
of $125,205 in constant dollars. The central to the issue of industry burden. rule is designed to improve the safety of
average cost per company represents an Will the costs be borne by the company the transportation of lithium batteries
arithmetic mean or the value obtained or be passed along to the consumer? If and cells. Any alternatives to the
by dividing the sum of total costs by the battery manufacturers pass these costs proposed rule should result in similar
total number of companies examined in along to consumers, will battery sales be safety benefits to warrant their
the IRFA. Thus, the average cost adversely impacted by these costs? The consideration. We considered a number
estimate cannot be uncritically applied term for the relationship to changes in of possible alternatives:
to the operations of every company quantity demanded in response to 1. Except batteries and cells
operating in the lithium battery changes in price is known as elasticity. transported by motor vehicle for the
industry. The 60 small businesses The price elasticity of demand for a purposes of recycling from Class 9
examined with this IRFA encompass a product is equal to the change in hazmat requirements. The
broad range of operations, as evidenced quantity demanded divided by the circumstances under which these
by the spectrum of annual revenues change in price. Price-sensitive or materials would be shipped are
presented in Table 4. The costs elastic goods are those where an essentially the same as those for
associated with complying with the increase in price is offset by a reduction disposal. The proposed rule provides an
proposed rule are primarily driven by in the quantity demanded. Examples of exception for lithium batteries and cells
the number of new battery designs price-elastic goods include theater being transported by motor carrier for
requiring testing and the volume of tickets, fur coats, and sail boats. Thus, disposal as long as they are protected
shipments of newly designated Class 9 for each percent that the price of these against short circuits and packed in a
packages. Based on the responses items grows, there is at least a one strong outer packaging conforming to
provided by the smaller firms examined percent decline in sales. Price-inelastic the requirements of §§ 173.24 and
within this IRFA, the evidence suggests goods are those where price increases 173.24a.
smaller marginal costs for these small proportionally more than demand 2. Provide manufacturers with four
decreases. Examples of price-inelastic years, as opposed to two, to comply
firms due to their limited size and scale
goods include gasoline, medical with the new testing requirements for
of operations. That is, smaller firms
services, bread, and milk. existing small battery designs. This
generally develop fewer new battery
The proposed rule would increase the would ease the burden on small
designs and ship fewer batteries
cost of production for the affected small businesses by spreading out their
compared to the larger firms operating
manufacturers and distributors. A compliance costs over twice the period,
within the lithium battery industry.
company selling a perfectly inelastic reducing the present value of the testing
There are exceptions to this rule, of
good could increase its price without costs. This option would reduce the
course, and to the extent any firms adversely affecting sales, while in the present value testing cost burden on the
regardless of size develop a larger case of perfectly elastic products, manufacturers by 2.8 percent, resulting
number of new designs to meet the companies cannot pass along any of the in an average annual discounted testing
demands of the market place (e.g., small higher costs of production without costs per company from roughly
firms filling a high volume of custom losing their customers. Because goods $89,572 to $87,075.
orders), the costs associated with the sold in the marketplace demonstrate a 3. Adopt a small production run
new testing requirements could be range of elasticities and some exception from the testing requirements.
greater. respondents indicated that costs could The UN Recommendations provide for a
As noted previously, the annual be passed along to consumers while small production run exception of 100
revenue of the 60 small businesses others indicated that costs would be batteries or cells. Some small businesses
examined in this IRFA total roughly entirely absorbed by industry, the costs felt that this number was too small to be
$681 million, while estimated profits of the proposed regulation are likely to effective and indicated that a higher
are approximately $145 million be borne by both producers and number (e.g., 1000) would be more
annually. Thus, $7.5 million in annual consumers. The actual distribution of appropriate. Other companies indicated
costs is equal to roughly 1.1 percent and the costs among producers and that they rarely make small production

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Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules 34739

runs. One company stated that a 4. Retain the current exemption from batteries and cells is far lower than for
threshold of 100 batteries or cells would the shipping requirements for mid-size lithium metal or lithium alloy batteries
cover 75 percent of their business and lithium ion batteries and cells. This and cells. This alternative would reduce
that a threshold of 250 would cover 85 alternative is based on the belief by annualized shipping costs per company
to 90 percent of their business. some small businesses that the by $5,613 annually, from $35,391 to
flammability hazard for lithium ion $29,778, as shown in Table 14.
TABLE 14.—COST SAVINGS FROM KEEPING THE CURRENT EXEMPTION FOR MID-SIZE LITHIUM ION BATTERIES AND CELLS
Total incre- Adjusted incre- Discounted
Year Total
mental cost mental cost total

2004 ................................................................................................................. 507,244 1,590,992 1,590,992 1,590,992


2005 ................................................................................................................. 574,246 1,801,146 1,801,146 1,683,314
2006 ................................................................................................................. 650,098 2,039,060 2,039,060 1,780,994
2007 ................................................................................................................. 735,970 2,308,399 2,308,399 1,884,341
2008 ................................................................................................................. 833,184 2,613,316 2,613,316 1,993,686

Total .......................................................................................................... ........................ ........................ ........................ 8,933,328


Average Annual ................................................................................. ........................ ........................ ........................ 1,786,666
Average Annual/Company ................................................................. ........................ ........................ ........................ 29,778

5. Increase the lower threshold for be subject to the increased integrity and and a $0.263 savings for batteries for an
lithium ion mid-size batteries and cells. communication requirements for small annualized savings of approximately
This would result in more batteries and batteries but would not be subject to the $4,717 per company, from $35,391 to
cells falling into the small category. Class 9 shipping requirements being $30,674, as shown in Table 15.
These materials would have already proposed for mid-size batteries. This
been subject to the UN tests and would would create a $0.211 savings for cells

TABLE 15.—COST SAVINGS FROM A LOWER THRESHOLD FOR MID-SIZE LITHIUM ION BATTERIES
Total incre- Adjusted incre- Discounted
Year Total
mental cost mental cost total

2004 ................................................................................................................. 522,519 1,638,903 1,638,903 1,638,903


2005 ................................................................................................................. 591,539 1,855,385 1,855,385 1,734,005
2006 ................................................................................................................. 669,675 2,100,463 2,100,463 1,834,626
2007 ................................................................................................................. 758,133 2,377,914 2,377,914 1,941,086
2008 ................................................................................................................. 858,275 2,692,013 2,692,013 2,053,723

Total .......................................................................................................... ........................ ........................ ........................ 9,202,343


Average Annual ................................................................................. ........................ ........................ ........................ 1,840,468
Average Annual/Company ................................................................. ........................ ........................ ........................ 30,674

There are incremental differences in products since the thresholds were 7. Require that small batteries be
the properties of lithium metal or established and this increase has shipped as Class 9 hazmat but not
lithium alloy batteries and cells and focused more attention on those require testing unless they are being
lithium ion batteries and cells. These thresholds. However, a major concern shipped internationally by air. This
differences are recognized in the higher with adopting thresholds tied to a state alternative recognizes that international
threshold limits between the small and of charge is how the state of charge of regulations require testing of batteries
mid-size categories for lithium ion a battery in transportation could be and cells that are being shipped
products. Some organizations have measured in the field to verify that it is internationally. While the incremental
argued that an equivalent level of safety in compliance with the regulations. cost of shipping these materials as Class
could be maintained if the threshold 6. Except small, single-cell batteries
9 hazmat is greater than shipping them
between small and mid-size batteries from testing requirements if the cells
with the increased integrity and
were increased from 8 to 16 as long as have already passed the UN T1–T8 tests.
This alternative is highly desired by communications requirements of the
the state of charge of the batteries was
those small businesses that manufacture proposed rule ($0.211 more for cells and
not more than 50 percent of the design
these batteries. They argue that the $0.263 more for batteries), eliminating
rated capacity.3 The aggregate
equivalent lithium content of lithium characteristics of these batteries, from a the testing requirements would provide
ion batteries and cells has increased safety standpoint, are essentially the significant overall cost savings. This
significantly in portable consumer same as for the component cells from alternative would eliminate the costs
which they are made. We do not have associated with testing small battery
3 Informal document presented to the 25th sufficient data to determine how many designs, thus resulting in an annualized
Session (July 5–14, 2004) of the United Nations battery designs would be covered by savings of $89,537 per company.
Sub-Committee of Experts on the Transport of this alternate exception; however Conversely, it would increase shipping
Dangerous Goods (TDG) by the International
Electrotechnical Commission (IEC). ‘‘Changes to
several companies and the PRBA costs by roughly $46,812 annually. The
special provision 188 for lithium batteries: Request indicated that the cost implications for annualized net savings per company of
for comments.’’ UN/SCETDG/25/INF.54. them would be very significant. this alternative would, therefore, be

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34740 Federal Register / Vol. 70, No. 114 / Wednesday, June 15, 2005 / Proposed Rules

$42,725, as compared to implementing Questions for Comment to Assist 5. The estimated training costs for
the proposed rule in its entirety. Regulatory Flexibility Analysis: Please hazmat employees and the number of
While it is possible that these provide comment or information on any employees that would become hazmat
alternatives might provide similar safety or all of the provisions in the proposed employees as a result of this rule and its
benefits to the proposed rule while rule with regard to their impact on small requirement that some batteries and
reducing costs to the regulated entities or on the cost estimates in this cells currently exempt from being
community, PHMSA still believes, interim regulatory flexibility analysis. shipped as Class 9 hazardous materials
based on our current research and We are particularly interested in would no longer be exempt.
information, that the proposed rule comments concerning the following: 6. Ways in which the rule could be
offers the best approach for ensuring the 1. The categorization and
modified to reduce any costs or burdens
safe transportation of lithium batteries identification of the affected small
for small entities yet maintaining a
and cells. PHMSA is open to businesses. Are there additional
consistent level of safety.
consideration of these alternatives based categories of small business that would
on the comments received in response be impacted by the proposed rules? For 7. Any relevant Federal, State, or local
to this IRFA. example, are we correct that there are rules that may duplicate, overlap, or
Identification, to the extent not a significant number of electronic conflict with the proposed rule.
practicable, of all relevant federal rules equipment distributors that are small 8. Industry rules or policies that
that may duplicate, overlap, or conflict businesses? would require small entities to
with the proposed rule. PHMSA is 2. The distribution of lithium batteries implement business practices that
unaware of any duplicative, and cells among the three size would already comply with the
overlapping, or conflicting federal rules. categories. This allows proper requirements of the proposed rule.
As we stated above, there are calculation of the batteries and cells that
international rules that address the Issued in Washington, DC on June 8, 2005,
would be subject to new testing and
transportation of lithium batteries and under authority delegated in 49 CFR part
shipping requirements. 106.
cells and this proposed rule attempts to 3. The estimated costs for testing the
improve the harmonization with those various battery and cell types. Robert A. McGuire,
rules. We seek comments and 4. The estimated shipping costs for Associate Administrator for Hazardous
information about any other rules which both production and prototype batteries Materials Safety.
may be relevant to the transportation of and cells, including packaging, marking, [FR Doc. 05–11765 Filed 6–14–05; 8:45 am]
lithium batteries and cells. labeling, etc. BILLING CODE 4910–60–P

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