In last month's column, we outlined a series of proposed regulatory revisions that, upon promulgation, will have sweeping impact on organizations that manufacture, distribute, use or transport hazardous materials. This month, the focus will be on the Notice of Proposed Rulemaking (NPRM) published on Aug. 24, 2010, concerning the transitional elimination of the Other Regulated Materials-Domestic (ORM-D) exception for consumer commodity hazardous materials shipments.
Issues of concern include the specific proposed changes, organizational and industry impact and implementation timelines. As the new rule mandates, the U.S. Department of Transportation (DOT) will phase out the use of the ORM-D and ORM-D-Air exceptions and conform to international standards for limited quantity shipments as the primary alternative for shipping consumer commodities as anything other than fully regulated shipments. This change will impact the thousands of companies that transport consumer commodities of hazardous materials in the United States each year.
Let's first explore how we got here.
EVOLUTION TO GLOBAL STANDARDIZATION
Federal hazardous materials (hazmat) transportation law allows for deviation from international standards to promote safety or accommodate other overriding public interests, but otherwise requires the alignment of hazardous materials regulations (HMR) with international transport standards and requirements to the extent practicable.
In a final rule published Dec. 21, 1990 (Docket HM-181; 55 FR 52402), the Research and Special Programs Administration (RSPA), predecessor to the Pipeline and Hazardous Materials Safety Administration (PHMSA), comprehensively revised the HMR to harmonize hazmat transportation requirements with the U.N. recommendations on the Transport of Dangerous Goods (UN Model Regulations). Following the publication of the rule, eight additional international harmonization rules have been issued based on the corresponding biennial updates of the U.N. Model Regulations, the IMDG Code and the ICAO TI.
Considerable efforts were underway to harmonize multi-modal standards with regard to the transport of limited quantities, including consumer commodities. PHMSA sponsored public meetings in February 2006 and March 2008 to discuss potential impacts on domestic stakeholders. On Oct. 21, 2009, PHMSA published an advance notice of proposed rulemaking (ANPRM; 74 FR 53982) that highlighted revisions under consideration for harmonization with international standards. Changes are intended to maintain alignment of the HMR with the sixteenth revised edition of the U.N. Model Regulations, Amendment 35-10 to the IMDG Code (effective Jan. 1, 2012), and the 2011-2012 ICAO TI (effective Jan. 1).
ORGANIZATIONAL AND INDUSTRY IMPACT
During the NPRM comment period, which ended in October 2010, PHMSA received supporting and dissenting feedback with regard to limited quantity, consumer commodity revisions from a broad range of players, including chemical manufacturers, transporters and industry associations and advisory councils. Supporters identified opportunities for cost savings due to standardization. Dissenters expressed concern that some items eligible for ORM-D will not be permitted as limited quantities. As a result, additional restrictions and fees likely will apply. It is feared that certain industries (e.g., explosives and ammunition) could face millions of dollars in additional shipping-related costs.
The phasing out of the ORM-D exceptions may be beneficial in the long term. However, there may be an immediate impact for companies that must revaluate their current policies and practices to ensure they adequately are prepared to continue to transport hazardous materials to comply with these proposed regulations. Many companies will be challenged to re-evaluate and update their transportation programs to include employee training, the management of transportation systems and data, packaging and the validation or re-work of existing classifications for products that are transported.
Retail products that are aerosols, paints, household cleaners and cosmetics are just a few examples of products that commonly are re-classified as ORM-D material. The ORM-D exception does provide significant relief, allowing shippers to transport regulated consumer commodities in a less restrictive and more cost-effective manner than if they were fully regulated. While the ORM-D exception provides a tremendous benefit to transporters of consumer commodities, it is unique to the United States, which renders it, at many levels, incompatible with international requirements. As elongated supply chains continue to become more global in nature, PHMSA has recognized the need to revise the current regulations to align with international standards to help ensure materials easily can flow in commerce.
In the NPRM, PHMSA emphasizes that it would not include the immediate or short-term removal of the existing limited-quantity provision in the HMR. It is important to note that the limited-quantity exception outlined by the international regulations provides greater relief for consumer commodity shipments than the current limited quantity exception in the HMR. The current HMR provides relief in the form of packaging and labeling (49 CFR 173.150 through 173.156). International limited quantity rules would require the U.N. diamond marking to be on the package, but would not require additional package marking or labeling, nor would it require shipping papers to be produced for consumer commodity shipments.
PHMSA anticipates the impact of this to be fairly minimal from a regulatory standpoint. However, it could have substantial impact for organizations that ship ORM-D materials, as many companies have built their hazmat transportation compliance programs on the notion that the majority of their consumer items are not regulated (a.k.a. handled as ORM-D shipments). Of course, this prevailing perception is not quite accurate.
The elimination of the ORM-D exception will compel a re-evaluation and re-engineering of transportation programs to account for new compliance requirements applicable to consumer commodity hazardous materials in the supply chain. Specific areas that may need to be addressed include employee training, transportation systems, packaging, reverse logistics systems and product classifications.
IMPLEMENTATION TIMELINE
The NPRM was released on Aug. 24, 2010 and was open for public comment through Oct. 25, 2010. On Jan. 19, the final rule was published in the Federal Register (Vol. 76, No. 12). The final rule included a transitional period of 3 years (2 years for air transport) to allow affected parties adequate time to comply with the new regulation. PHMSA has authorized voluntary compliance with the new regulations effective Jan. 1. Specifically, the new rule identifies the following transitional timelines:
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Until Dec. 31, 2012, ORM-D-AIR for an ORM-D that is prepared for air shipment and packaged in accordance with §§ 173.63, 173.150 through 173.155, 173.306 and the applicable requirements in § 173.27.
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Until Dec. 31, 2013, ORM-D for an ORM-D that is packaged in accordance with §§ 173.63, 173.150 through 173.155 and 173.306.
The readers of this column who will be impacted already should have begun to develop a compliance transition plan. Now is the time to evaluate the tools, expertise, data and materials that will be required and identify qualified sources (internal resources, third-party providers) for these solutions, establish a project timeline for all affected departments and address cost concerns (if there was no proactive allocation for this year's budget). There are many options to choose from, but a thorough analysis of your specific situation to ensure a seamless compliance transition involves complexities that require coordinated expertise and effort.
Full text of the international harmonization rule HM-215K can be accessed at http://edocket.access.gpo.gov/2011/pdf/2010-33324.pdf.
Kami Blake is a solutions engineer with 3E Co. In this role, she provides technical expertise to assess regulatory requirements, information management technology and analysis of existing hazmat programs to develop compliance solutions. Blake launched her career in 1982 in the United States Marine Corps and is a two-time Navy Achievement Medal recipient for small systems implementation and training. Prior to joining 3E in 2002, Blake served in quality assurance, supply chain management and process engineering roles in the biotech and medical device manufacturing industries. Isaac Powell is product manager for 3E Co.'s Technical Services, which includes emergency response, hazardous waste management, transportation, classification and regulatory reporting services. He has been certified as a hazardous materials manager by the IHMM and is a member of the AHMP, National Fire Protection Association and International Code Council.